Pent Up Demand, Tesla Party Permit Getting Punked, Meta Execs Far From Home

March 24, 2022
Today we talk about the potential effects of all the pent up demand that may be building and what that may mean for the next year or so. We also talk about a community pushing back against a Tesla grand opening party. We’ll also take a look at the extreme remote work happening among Meta Execs.
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As some buyers stay on the sidelines, pent up demand continues to grow according to Thomas King, J.D. Power’s president-data & analytics and chief product officer

  • King forecasts heightened buying levels will consume inventory once it is more readily available, keeping demand strong
  • Above MSRP sales were 65% in this year’s Q1 vs. about 15% at the same time last year, says King
  • average vehicle transaction price reached $44,400 this year compared with $34,300 in 2020
  • End of month carmaker tactics that reduced margin to increase sales dropped from 17% to 8%
  • Trade values average $9,380 compared with $4,246 three years ago
  • Lease turn ins this year are half what they were last year.  1M down to about 500k

Tesla’s 15k person Grand Opening party for its Texas plant is hitting resistance obtaining a permit from Travis County

  • The argument is that Tesla is treating the community like a workforce and not a community and says this party will not do anything to build community


Meta Executives are taking remote work to another level as top executives ditch the Menlo Park campus for exotic and remote locations such as Hawaii, Israel, U.K., and more

  • “Naomi Gleit, the company’s head of product and one of its longest-tenured employees, has relocated to New York. Chief Marketing Officer Alex Schultz plans to move to the U.K., and Guy Rosen, the company’s vice president of integrity, will be moving to Israel in the near future, according to a company spokesman.”
  • Javier Olivan, Meta’s chief growth officer, has split his time between California and Europe but is planning to spend more time abroad, the spokesman said.
  • Adam Mosseri, the head of Instagram, in recent months has been traveling and working remotely from locations including Hawaii, Los Angeles and Cape Cod, according to people familiar with the matter and the executive’s social-media posts.
  • Zuck is planning on splitting his time about 50/50 away from his California residence


SPEAKERS

Kyle Mountsier,Paul Daly

 

Paul Daly 00:25

Yo, it'sThursday, March 24, if you had any idea how fast we blew into the office andhit live stream today, you would laugh at us. But that's just indicative ofthis industry and what we're doing to make some trouble. Let's go. The peoplereally want to know who isn't who. You know, we're a little bit repeat, we'restill we're still in baby mode. I mean, if you've ever had a baby, youunderstand a one day event.

 

Kyle Mountsier 00:50

It's nota one day event, it happens every single day. And you've got to shift andadjust and things are teen years. Yes. And and then and then pile on that, oh,you know, starting a couple companies in the last six months. And it's like,hey, sometimes there's meetings, on top of meetings, or meetings, and we've gotto get a pot out. And, and what you know what we haven't done. We haven't donethis in a while. We just I want to thank the watchers, the listeners, peoplethat tune in every single day, there are becoming a lot more of you. So justknow you're not alone. If you're sitting there listening, that you're notalone, but we want to thank you, because here's the thing, we we love hangingout doing this together, we would probably do this anyway. But we love gettingto share the mornings or share with the afternoon, the drive home, whatever itis that you listen to this podcast. And it's just it's great to feel thatcommunity feeding back we get, you know, the messages, the the, you know, theLinkedIn messages, the the the text messages, the stuff in the thread as theshow goes. And it's just really encouraging to be a part of that community. Andso that's why we roll in and sit down on our seat and a minute later pressplay.

 

Paul Daly 02:04

Yeah,because we love it. And we do. All right, we got a few things. Hey, first ofall, if you ordered swag, and we've said this, like 17 times, it's like in themail, on a truck or on a plane somewhere. Right now, Danielle and Isaac reallydid a big push this week, all the T shirts got moved around where they neededto. We tagged everything out, we packed it up really nice. So if you get yourswag this week, or over the weekend, or whatever you get it, take some picturesand posted on social media because it's gonna be a ton of fun to just celebratethe other troublemakers rocking their troublemaker swag, and the troublemakermugs and like, hey, this, this party is just getting started. And for those ofyou who ordered a shirt, I think the mugs as well, you're going to get a littlespecial tag with a special link to a special Spotify playlist that we curatedjust for you. So a little surprise and delight, you're going to have a lot offun with that. And hey, also if you are an industry partner, or if you're aretail business, and you check this out, and you think this audience isvaluable, we are filling out the calendar right now for email sponsorships, andwe have some other big big swings planned. But if you want to be a part of thatmix, in a really cultivating the troublemaker community with us, just reach outto us at crew at as otu.com or there's a link in the show notes and the podcastnotes so we can build this squad and go kick some gates in. Let's get to somenews.

 

Kyle Mountsier 03:23

Let'sget to some news.

 

Paul Daly 03:27

What arewe talking about? First one, this one isn't in the show notes. And we'reprobably gonna end up talking about this too long. But I just got a breakingnews alert from my Wall Street Journal app because I am subscribed because I'ma sophisticated business person. It's very Uber has just announced that you cannow hail a taxi from the Uber app.

 

Kyle Mountsier 03:47

Okay,real quick. Let me

 

Paul Daly 03:49

hold onhold on it deserves one of these.

 

Kyle Mountsier 03:53

Okay,first, let me just let me just roll out the irony here. And I know what theymean. But

 

Paul Daly 04:01

I get itI get I even like what

 

Kyle Mountsier 04:03

itactually means. But track with me the irony of being like news, you can get ataxi in our app is wild to me because it's like now you've been a taxi servicethe whole time, but you branded yourself as not one. But now you have to bringback in the real taxi service to be able to execute your taxi service. Justit's gonna get ironi in the world.

 

Paul Daly 04:27

It'sgonna get messy. You know, obviously they're they've done it out of duress. Youknow, you don't just make that decision. They've been the anti anti taxitransportation service since they broke onto the scene. They literally foughtthe taxi companies. It was like, it was like that scene in Anchorman, rightwhere the two new stations can use Uber and the taxi drivers except there are alot more taxi drivers and Uber drivers were just really nice.

 

Kyle Mountsier 04:51

Buthere's the deal waters in the back.

 

Paul Daly 04:54

We havecomfort, you can adjust the temperature. How much conversation Do you want? Sothere's a shortage drivers. So Uber, you know, from a business play, you don'twant people to get into the habit of not opening the Uber app, right? Becausethe second I'm like, oh, it's probably going to take too long. I'm going toopen it. No, you want people constantly opening your app keeping on theirhomescreen making it their first tap. I have no idea. I didn't even have asecond to read the article. Because it happened right before we came into theshow. But we'll probably read it right after this and then probably included intomorrow's email somewhere. So if you want to see what we have to say about that,you can just sign up for the email list Soto calm, but we just had to talkabout that. Alright, let's get to the stuff that's actually in

 

Kyle Mountsier 05:34

theOkay, let me we got cuz we got to connect this right, I can't drop the newsthing. Right now, I can't, we can't but I love I love connecting it. So thinkabout this. A lot of tech companies, especially like Facebook, and things likethat. Target monthly, monthly active users. So Uber does the same type ofthing. How many people are opening our app and active? Active with it? Right?And so when you think about that, from a business perspective, how are youtracking, especially on your website, monthly active users? Am I getting peopleback in back in the flow? Are they coming back for service? Are they comingback to look at their cars for their grandson, their kid their themselves,though, all of that type of stuff? So you know, a lot of people want to uptickunique users in their website. But but the way that software companies thinkabout it is how do I get monthly active users rolling and continuing to stay inmy life cycle? Because that's a better, better impact. And so a lot of groupsin the automotive space are thinking about this. And thinking how do weincrease the monthly active usership of our group website knowing that we'vegot 510 1520 dealers in the region. And so thinking about this, as those groupsites are doing the same thing that Uber is saying is, oh, we have we actuallyhave the user base sitting here asking for taxis or asking for used cars or newcars or service or parts or anything like that. And if we can roll that up,increase our monthly active users know what those people are doing, and thenretell stories to them over and over. That's, that's the real that's the real flywheelof customer retention, especially as it comes to these as groups areconsolidating in the automotive space on the retail side,

 

Paul Daly 07:17

theflywheel of customer retention, by Kyle mounts here.

 

Kyle Mountsier 07:20

Oh,

 

Paul Daly 07:22

let'sget to our actual first story. Okay, so um, basically, this is from awards autoarticle, it's a summary of Thomas King, the JD Powers president of dataanalytics and Chief Product Officer. It's a talk that he gave just a week or soago about what they see with their data and their insights on what is going tohappen with inventory in the future. Very interesting piece. Very interestingarticle, we have a number of points here. So here's some bullets. He for Kingforecast, heightened buying levels that will consume inventory, once it'sready, because there's so much pent up demand. He's like, okay, they're gonnasay inventory is going to open up and all the customers that are sitting on thesidelines right now, I'm one of them, because my lease is up and I'm hangingtight. Right, I would be flipping into another vehicle right now. I don't feellike paying super high price. I don't feel like waiting for it. And so I'm justgonna stay as I'm happy to tell you right now. I'm also an so he's saying pentup demand is going to consume that which is really a plot twist in like, hey,we have inventory again, he's like, then all these other buyers are going toenter the market, everything's still going to be pinched. A couple ofinteresting data points that above MSRP sales are 65% of transactions thisyear, versus 15%. Last year, does that mean 65% of people are paying over MSRPwhen? A year ago it was only 15%. So, I mean, that means are you

 

Kyle Mountsier 08:42

withsomeone? Yeah, I was having a conversation, the conversation with someone? Areyou our industry is super unique in that we have MSRPs Yeah, right. Like, milkdoesn't have an MSRP the price just goes up

 

Paul Daly 08:54

marketmarket, right? Yeah. But it can also double in price.

 

Kyle Mountsier 08:58

Exactly.Yeah, we don't go from 60 to 120. overnight. In automotive, welcome. Somethings

 

Paul Daly 09:03

do likesuggested Manufacturer's Suggested Retail price on like, but usually Usuallythat's a discounters ploy. Right? Usually an MSRP is a discounters ploy. Theyput that price on there to kind of like validate a higher value when they knowthey're going to sell it for 30%. Less, right? It's a mind game. It's how JCPenney did so well. Right. It was just, it was a discount business plan. Cool.No one's doing that. Yeah, right. Yeah. And when you're at JC Penney, no one'spaying $43 for the t shirt. Right now. What not, but it's 60% off every day,right every other week.

 

Kyle Mountsier 09:36

Well, inhistory, well, at least for the last, you know, 2530 years. That's been theploy of MSRP in automotive. And if you think the reason why MSRP exists, thereason why the Monroney label exist is because we actually had this any pricegoes and so regulators said no, we're gonna set whatever the suggested retailprices and our operate off of that plus or minus, right? And, and then what itbecame, was a discounters ploy. So it was, hey, that's the MSRP were X amountlower because of rebates or discounts or whatever it may be. And now it'sbecome something that people are looking at going, Wait a second MSRP is overhere. But you're charging over here. We talked about the whole markup things,the marks out markups, or or, or whatever it was. So very, you know, aninteresting piece that automotive struggling with that a lot of othermanufacturers or, or retail businesses aren't? Because they don't have that setthat standard, right? Yeah.

 

Paul Daly 10:36

No, it'sit's a real challenge. And it's going to be something I mean, it'll beinteresting to see, we're going to study this for years, right? And the effectsof it and what it actually did a couple of data points, the average vehicletransaction price is 44,000. This year, compared with 34. Three last year,that's a huge increase, or 20 to 25%. More expensive, on average, for reallythe same vehicles. Here's the flipside, right trade in values are up to 9380$9,380. Last year, versus $4,200 to three years ago. So I mean, trade ins arevalue. So another a lot of people are saying like the equity position is notchanging that much, Judy, how know how many? How many phone calls and text areyou getting from friends being like, what should I do with my car? All day one,all the all day, every day, people are like, hey, my lease is up. What should Ido? It's like, are you happy in the car? Yeah, then stay in the car. Stay inthe car, I can get more than I Oh, I can make some money on it. It's like, no,no, you're gonna end up behind. Right? Because the new car price is just gonnabe that much more. So final final data point. Another thing you pointed to isthat lease turn ins, right? I'll usually a huge source of used car inventory.This this next year, we're looking at half a million versus a million the yearprior. Right? So there's another half a million vehicles that aren't going tobe pumped into the used car market, which is going to generate more pressure onthe new car market, which is again, going to suck up that inventory when ithappens. So check out the whole articles. Very interesting, but make sure youcheck it out.

 

Kyle Mountsier 12:07

Andthink about that. I mean, from a lease perspective, there's a lot of 24 monthleases out there, which is right around when we're in that two year timelineover lockdown started out right. Yeah, yeah. So you think about there's notjust market indicators where people are keeping those leases or buying themout? Because the residual is right, based on what they could purchase a usernew car. But there's also just less inventory coming in because there was lessinventory sold in that, you know, 120 day period, whenever one was kind ofgoing what's going to happen, right? Oh,

 

Paul Daly 12:36

no, butno one was buying cars. Right? Right. Buyers Only. Yeah, that's good. That's agood, man. I remember that so plainly. I remember so plainly. It feels

 

Kyle Mountsier 12:44

likeyesterday. Sometimes. It's why

 

Paul Daly 12:47

itstrangely it does like I remember it. So playing with my kids for two yearsyounger, two years younger.

 

Kyle Mountsier 12:53

And it'snuts. It's not.

 

Paul Daly 12:55

Alright,let's talk about what's next. We got to really have a couple minutes we got

 

Kyle Mountsier 13:00

to talkabout Tesla and rivian. Both of them getting Goethe both of them getting chiBosch is one from Texas, one from one from Georgia.

 

Paul Daly 13:08

So Teslaopening its Gigafactory right near Austin, in Travis County. And they're tryingto throw this big 15,000 person party right with two stages and all kinds ofyou know, thing of it Tesla fan level fanfare, and a couple of organizationsAnimos area, the head of I'm sorry, wrong, wrong article. A couple ofexecutives in a couple of county executives and conservative concern I can'teven talk right now can't fire mental conservation organizations are pushingback saying don't give them a permit. They haven't been a good communitymember, right? Their plant constructions been dusty. They're not really paying.They're not trying to build community, this event isn't going to buildcommunity. Let's not give them a permit until they decide until they decide tobe a better community member. So how do you think this one's gonna turn out?Yeah, I mean, I think it's gonna turn out with a 15,000 person,

 

Kyle Mountsier 13:57

I thinkthere's gonna be a 15,000 person party, because that's a lot of revenue for anarea. But it's interesting to hear that what people in communities want iscommunity builders from business. So if you're a retail automotive dealer, whatyou already have lean in further, because that's what people want. They justhave to see it and feel it. Yeah, right now. And still, they don't see it andfeel it. They don't push back. Well, this is

 

Paul Daly 14:25

thedifference between retail automotive dealers and big companies like across theboard, right, which is here talking about how speaking of community retaildealers winning one. segway because winning one because of community. Go aheadbring this up. I didn't this isn't in the show notes, but you read it thismorning.

 

Kyle Mountsier 14:43

Yeah, sorivian came in and they said, Is that what you want me to go to? Yeah, yeah,yeah. Yeah. So it's not in the shownotes. Again, so it's hard to know wherewe're going, but we're here rivian is building this massive factory just northof Atlanta, right. I mean, just tons of jobs, all this stuff with theintention, they've come out with the intention saying, we're hoping that thisgives us equity in Georgia for Georgia to say thumbs up, you can sell direct toconsumer. Well guess what? Georgia was bad, wrong. Not gonna happen. And Iappreciate the jobs, appreciate all that type of stuff. But we're stillprotecting the franchise system in our state. So thumbs up good on you. And andI think that's good. You know what, and probably for rivian, if they can figureout some level of franchise model, it'd be better for them in the long run.

 

Paul Daly 15:34

Forsure. And here's the thing like people vote, right, yeah, laws are made bypeople, people who are elected by people. So the consumer sentiment is everything.It's everything we're fighting for, right to show value, right to show the factthat we are great community members to show the fact that we do have thecommunity's best interest in mind that we're contributors were not flying themoney, you know, captured it here and flying it everywhere else. And, hey, ifyou keep that sentiment, I guess what the protections will stay in placebecause you're serving the customer the best way, I'm not saying keep the bestsolution away from consumers. I'm just saying we're both saying that we believethe franchise auto dealers are the best solution for consumers and we need toearn it. Right. We can't rest on you have these laws. Whoa, that's water overmy desk. We're like, we're like, it's enough. You don't have to run everybodyscrambling to get a towel. It's just par for the course today.

 

Kyle Mountsier 16:28

Think ofa software company. You got 30 days every single, you got 30 days to keep thebusiness. Keep the business. That's the business.

 

Paul Daly 16:36

It's ourgame to lose. So that'll be the final word because we have meetings to get to.It is our game to lose. We have the laws in our favor. Let's not rest on them.Let's earn them every single day you get to earn today. Go make some trouble.Go. Go go go. Go. Thank you.