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Flip the Switch Episode 4 – Cryptocurrencies

October 17, 2017
Table of Contents

[00:00:05] SOPHIA: Intro. This week on flip the switch. Delta Airlines makes flying with them even easier. Wal-Mart and Target team up with Google to compete with Amazon. Facebook rolls out its version of post mates and we introduce some new segments including “What is Amazon taking over this week.” Our main discussion revolves around the growing popularity and legitimacy of Bitcoin and other crypto currencies in the marketplace. We dive into some recent developments in the crypto world that are capturing the full attention of some very important entities and beg the question. Should you be investing. Let’s get into it.

[00:01:01] Flip the Switch podcast presented by Power Digital Marketing.

[00:01:04] AUSTIN: We’ve got a very exciting show for you guys today. We’re going to be talking a lot about Cryptos. We’re going to get into our typical news and other segments as well. Patric how are we doing tonight what’s going on.

[00:01:15] PAT: Doing great. Hey. Long day at the office. But that’s a Monday for you. Excited to crank out this episode though.

[00:01:19] AUSTIN: Yeah. Hope you guys had a pretty solid Monday and we’re going to bring you in to your Tuesday now so let’s go ahead and hop straight into the news.

[00:01:26] PAT: So the first thing that we want to talk about Delta Airlines just released an app that’s going to essentially enhance the consumer experience and what I mean by that is when we take a look at. So this is in Time magazine a few days ago they updated saying that Delta Airlines has released an update to their app that eliminates the check in process your boarding pass will appear 24 hours before your flight automatically. It also says that for multiple trips on the same day you can now toggle between trips. In the today setting They’ve also added the ability to enroll in their sky miles program directly from the app and it fixes bugs. That is pretty huge. Yeah. And it’s something that we don’t really see very much with the airline industry as a whole because I feel like they kind of know that they have a little bit of a strong hold on your you know transportation nationwide. Right. This is this the first major airline to roll this out it is the first major airline to to roll this out and it’s saying you know this magazine Time magazine specifically is saying that they could this could spur other airlines to adopt something similar. But I think the bigger takeaway here is just that they understand what consumer experience needs to be in order to get traction in the online space.

[00:02:35] AUSTIN: Does that change the way that the boarding occurs so most times you know one two three whatever X letter or with Southwest it’s based on when you check in to determine how you get on. But does that change any of that. Or is it just going to be pretty much the same as it was before.

[00:02:51] PAT: It’s essentially going to be the same as it was before. But again keep in mind this is essentially a beta. You know this is like a new update that they’re rolling out and they’re going to see what the feedback is like. I wouldn’t be surprised if they make some kind of update like that. It’s also not clear how customers can check bags or request seat changes loser other pieces of added functionality that the app update could have down the line. But again going back to that first point I really think that it’s because of the consumer experience right. They’re trying to make sure that people who are potential customers from Delta Airlines feel as accommodated to and is serviced as possible when trying to engage with their brand and that’s something that you see across a lot of the top performers in any industry.

[00:03:28] JOE: Do you think this is a response to airlines having a pretty rough year when it comes to the PR department or do you think this was something that was in the works before a lot of this fiasco has happened over the last year.

[00:03:38] AUSTIN: I’m going to I’m going to say that it’s probably along the lines of the PR situation. I think they’re probably looking for anything they can possibly do to get people to go with their airlines at this point. I think Delta didn’t have his biggest issue as United did. But along those same lines at this point people could be frustrated with flying just in general and they’re probably going hey what can we do to make this easier to get people to lock in a little bit quicker.

[00:04:01] PAT: And along those lines I think that he’s right in the sense that it is along the PR side. I think that it’s also kind of a advertising play in a sense this is competitive advertising essentially what they’re doing right now. They understand that people who fly Delta also choose typically between Delta and United. United is one of their biggest competitors. They like Joe was saying had a terrible year when it came to the PR department. And what they’re doing right now is essentially rubbing salt in that wound where they’re trying to differentiate themselves as a customer first brand to as such an accentuated level that they’re willing to cater to people as opposed to you know really playing the regulatory and trying to drag people off of flights.

[00:04:40] AUSTIN: Yeah I think that that’s it. That’s right and drag people off flights. Yeah that’s a pretty good point. I am thankful that the days of forgetting to check in seem to be on the way out which has been one of the most frustrating things about flying in general so the app based product seems to be the way to go. I like that the boarding pass is going to show up on your phone 24 hours beforehand. I think that’s going to make a big difference for consumers.

[00:05:04] PAT: Cool. Jumping into our second piece here news came out in Adweek last week that Wal-Mart and Target are going to be banding together to take on Amazon with Google specifically which you know is super interesting the idea that Wal-Mart and Target could ever publicly chat about being you know essentially in cahoots with one another is an unfounded notion until pretty recently you know and again you know this goes back to a discussion that we have a lot on a bunch of our episodes. It’s the Amazon thing. You know it all goes back to how they can basically curb Amazon’s dominance within the marketplace.

[00:05:38] AUSTIN: Yeah. Not to give up what we’re going to be discussing a little bit later with Amazon but they seem to have such a massive stranglehold on the market that these major players their direct competitors are losing so much market share that they need to team up in order to make such change.

[00:05:51] PAT: It’s interesting too because the Coopersmith who’s the director of Amazon or research you know he’s basically coming out and saying that Amazon feels victimized by these types of partnerships and the combativeness that other retailers and big box retailers are undertaking. And what I mean by that is we like take a look at this quote here pulled from this ad week article. These partnerships aren’t about voice he said. They’re really more symbolic of the fact that major retailers are willing to partner with Google in the fight against Amazon brands and retailers need to scale their audiences in order to compete against Amazon online and Google can offer that.

[00:06:24] AUSTIN: Yeah and you know somewhere Jeff Bezos is just laughing because that is the most competitive man in the United States and now he’s pushing out these just massive companies into a space that you know he wasn’t in in the very beginning of this company right. They were a library they were just online for books and that purpose and now he’s pushing out target. He’s pushing out you know to the point where they have to team up with Google just to keep some market share.

[00:06:47] PAT: Exactly major players in this space. The specifics of their partnership talk about how Target announced specifically that it’s making its inventory available on Google Express which is a shopping service. It also accounts Costco Kohl’s and Walgreens as some of their clients and then consumers will also be able to ask Google assistant which is plugged into Google home devices to order products. What does this sound like to you.

[00:07:10] AUSTIN: It sounds exactly like Amazon’s products. I would say or what. Alexa.

[00:07:15] PAT: Alexa. Ding ding ding. So what that means is that they’re trying to directly go head to head with one of the best selling Amazon products you can now tell Google home essentially hey I need a blanket or I need groceries and it can add that to your shopping list to your to do list by pulling from Target and Wal-Mart’s inventory and what do Target and Wal-Mart sell literally everything that was brought up an interesting point when you were talking about that.

[00:07:39] AUSTIN: I was thinking about the fact of why Target or Wal-Mart allude to this a little bit why they want to team up with Google and it’s the fact of how much data they have on the individuals that are typing in search query. So as as voice rolls out and you know products like Aleck’s out where you can order things over become more popular they want to have as much data as possible so that they can get people to go to their product instead of over to Amazon. So I think that that has a lot to do with it too. They just don’t have as much data. These two major brands Target and Wal-Mart as Amazon does because their search engine as well. So they want to go hey we need to team up with a search engine we need to get this data as well and possibly gain back market share.

[00:08:16] PAT: Yeah exactly. You see that a lot too. You know people that are coming into these spaces right now that didn’t have a huge e-commerce footprint before are essentially taking best practices that they observed from Amazon pulling it down to their scale and trying to replicate it. One guy his name is Mario not Torelli He’s a managing partner and BLM and he says that this is clearly a chain reaction to Amazon’s acquisition of Whole Foods. He says Google’s expertise founded around search gives them a profound understanding of consumer intent. So again that goes back to what you were saying they’re trying to leverage that data but more importantly they’re trying to leverage the consumer intent data that Amazon has as the third biggest search engine in the world behind Google and YouTube. So it’s going to be interesting to see how this goes. One other point that was pretty funny in this article that I was looking at the data sharing that they’re talking about between these two big retailers there’s possible conflicts of interest there. A Google Google representative actually was quoted saying that privacy is a top priority at Google which is pretty funny given the news that came out about Google this week sitting in on you know home conversations using their audio recording devices that is coming out and you know admit to that this week. So we’ll see how that all goes.

[00:09:27] AUSTIN: And you know their number one stream of revenue is ads and you know how did they get people to invest is they provide them with so much data about the individual user and what they’re searching that you know they garnish that market as the largest advertiser in the world. So they are rich in data. And for them to say that privacy is key to them it’s just a slap in the face for the consumer.

[00:09:47] PAT: Yep exactly.

[00:09:49] AUSTIN: All right we’re going to roll into our third and final piece of news for the day. Facebook rolls out post stage door to ask solution specific to chipotle and papa johns. So my understanding now is that they’re going to have the ability to order food straight on Facebook which basically eliminates the need for apps.

[00:10:08] PAT: Yeah exactly it’s just another play by Facebook trying to keep people on the app for longer. Right. You know it’s it’s like it’s pretty funny you’re taking a look at this. There’s the prevalence of these kinds of on demand food services like post made or a dash 24 which is powered by Yelp. Over the course of the last two years it’s been really big and you know I think people in these social you know social media world are understanding that when they’re going to those apps to order dinner they’re leaving the apps they want those users to stay on. So this is just another update that’s been rolled out by Facebook to try to keep people more centered on the platform and potentially engaging further with things.

[00:10:45] AUSTIN: You’ve seen Facebook really try to takeover as many verticals and just cram that into their social media as possible. You’ve seen them do that with other e-commerce such as buying clothes where you can occur on Facebook is now and now they’re also going to do it with food. So at this point Facebook is looking at its user and saying we do not want you to go anywhere else for anything at all except for Facebook so I don’t care if you’re talking to your friend. I don’t care if you’re hungry. I don’t care. You need to buy new shoes. You can do it all here on Facebook seamlessly.

[00:11:12] PAT: I think that it’s really interesting that they’re rolling this out right now because other companies have done this so far not in a very favorable position. A lot has come out recently with Facebook’s involvement with the 2016 election. They’re taking a little bit of a PR hit. The other company that rolled out something similar to try to keep users on the Web site keep that D-A you or daily active user count high is snapchat. They rolled out a feature that lets people book Uber and Lyft rides and make restaurant reservations directly through the app. And we talked about how they’re kind of starting to fade away into the dust a little bit too. So it’s just a way for them to try to keep people on site keep that DA count up and keep them from leaving essentially.

[00:11:54] JOHN: Why do you think they chose Papa Johns and Chipotle as their two options. I mean just for me I understand there’s probably a lot of money in that deal. But Papa John’s, they just don’t seem like the most enticing options to throw out there as your first try you know.

[00:12:10] JOE: I think chipotle is a pretty obvious choice just because no matter even if you like Chipotle or you don’t like triple if someone asks you you’re going to say you like chipotle. It’s just the cool thing to do.

[00:12:21] PAT:That’s entirely Joe’s opinion.

[00:12:24] JOHN: Did you know that guac is extra?

[00:12:26] PAT: I did know that guac has extra. Thank you for the reminder.

[00:12:28] AUSTIN: So what comes to mind for me with Chipotle is their recent issues right with their market because they’ve had so much health problems and this is also a PR play for them so teaming up with Facebook might make them seem a little bit more legitimate. And also to get get back in front of consumers after such a negative year so I see that more of the play here.

[00:12:47] PAT: I see this more as potentially testing. I see these are two companies or restaurants rather that appeal to very broad audiences of people. You don’t have to like Mexican food like chipotle. You don’t have to be a pizza connoisseur It’s like papa johns you just have to be hungry. So this is their way of seeing whether or not this the solution that they’re rolling out is going to have any validity in the marketplace to me. I mean I don’t see this as necessarily targeted in the sense that we know that X amount of our users like our Mexican food enthusiasts and half of our users are pizza enthusiast I don’t think they’re thinking like that. I think they’re trying to see whether or not this things even get to work by using too broad base appeal mechanisms to do that.

[00:13:28] AUSTIN: I hope we start getting ads on Facebook from Papa John’s work. Peyton Manning talking directly to you saying hey I think you’re hungry it might be time to buy pizza.

[00:13:38] PAT: Right through the ceiling. Absolutely.

[00:13:42] AUSTIN: He’s killing it on a lot of different advertisements so I’m not going to be surprised if we see that.

[00:13:49] PAT: Cool so jumping into our main segment here we want to open up a little bit of a discussion around crypto currencies. A lot of you know news has come out about it in the last week or so. You know what the value of Bitcoin jumping all over the place. We cover this you know pretty frequently we’d like to stay on top of the news and there was genuinely so much that came through in the last week that we wanted to dedicate our main topic discussion to that. The center piece of this discussion is essentially whether or not they are legitimate currency. We’ve heard a lot of conflicting opinions about that from some of Wall Street’s best including Jamie Diamond and then also the CEO of Goldman Sachs and Merrill Lynch. First thing that we’re taking a look at right now bitcoin as of last week officially has a bigger market cap than Morgan Stanley and Goldman Sachs that is just absolutely wild to think about at this point.

[00:14:39] AUSTIN: It’s passing such mainstream situations as two of the largest banks in the United States. I think a lot of this has to do with the hype that has occurred at the Bitcoin I started to rise so drastically and rapidly a lot of people wanted to jump in. I think that that’s a pretty natural thing that occurs in the market when something starts to go up. It’s it’s that emotional by that you don’t want to miss out on. So we’ve seen that price skyrocket and what really started this is to get a little bit technical here on what is occurring. There is a what’s called a hard fork about to happen with Bitcoin and to put that easily there is just to block change that will be created. There will be split into their differentiating block change. The reason for this is because the people that work on Bitcoin the developers they want to make it easier for the everyday user to mine Bitcoin. So the whole purpose behind bitcoin originally was that you could mine it and then have it right. As time has progressed it’s becoming a lot more difficult which is built into the algorithm to mine it. So what has happened is large large large areas of industrial size have started to kind of get a stranglehold on the market because they buy so much hardware and fill warehouses full of them so that they can mine all of the Kryptos or all the Bitcoin excuse me. So what these developers want to do is hey we’re getting away from what it originally was. Let’s make this a little bit easier let’s change the algorithm by splitting the fork started by splitting the block chains into two via fork. And that will allow more users to have a chance to mine bitcoin.

[00:16:04] PAT: OK so let’s say that I’m a user who wants to obviously have that heightened level of access. Why is the fore beneficial for me in that scenario.

[00:16:13] AUSTIN: I would say just mostly because if you’re a minor then you get a better chance they get more. And that’s pretty much it. So besides that there’s really not a whole lot. And I think this price is greatly in free inflated right now because people are so excited about this possibility so they’ve just been trying to buy as much as possible and also another thing that’s made that go up so quickly is when the block chain splits there’s actually another currency that’s going to be created because of it. And it’s called Bitcoin gold. So to take you guys back two months ago there was actually another fork that occurred and it created a second currency called Bitcoin cash.

[00:16:49] PAT: Time out when you say for. Is this essentially the same thing as when the stock price gets too inflated with an IPO. Is that the same thing as stock splitting or is it different.

[00:16:59] AUSTIN: To a degree it’s pretty much the same. But what makes it different is that it basically creates a clean slate of transactions so the original four are the original block and will house all the original transactions that occur. You can check to see who sent what where. But now with this clean block chain it’s basically starting to zero in terms of transaction. So every for everything from there on out will be a completely new transaction separate from the original So in a sense it’s completely different. But at the same time you are like you said when a stock splits you’re getting equal amount. So you’re going to get just as much Bitcoin gold as you hold in Bitcoin which is obviously a huge incentive to buy Bitcoin before the fork occurs because if there’s any value assigned to Bitcoin gold which there might be they’re not totally sure yet. Then you could end up making a 100 percent profit turn here just simply by holding Bitcoin. So with Bitcoin cash that actually happened and people were able to capitalize on this by having the price went up and then you sold it and then I think it hit maybe four or five hundred dollars. So nothing remotely close to what the price of bitcoin is but still I mean if you hold you know three or four Bitcoin and then all of a sudden you have four Bitcoin cash you just made six times for twenty four hundred dollars just like that. So that’s the incentive there for people to hold Bitcoin until the fork occurs and possibly profit.

[00:18:13] PAT: Yeah that’s kind of what we’ve been seeing too a big you know aspect that Fortune magazine was kind of attributing to the heightened market cap by the way the market cap. You know the value of all the tokens that are currently in circulation is up to 97 billion dollars right now. According to cryptocurrency market capitalizations which is even higher than Morgan Stanley and Goldman Sachs who incidentally had both paid penalties in relation to the financial crisis. What we’re seeing too is Bitcoin is price is very much all over the place which again gives some kind of validity to what you’re saying where there’s a lot of kind of speculation around it right now. You know prices are getting driven up and because you know it needs to be a little bit more affordable in a sense and also accessible because there’s clearly so much not hype but interest around it right now.

[00:19:03] AUSTIN: So when we talk about is it legitimate or not you still can’t think about bitcoin as dollars or yen or any type of currency that you could trade in for something like that. Bitcoin is still going to be in line with more of a gold. So something that you know you would hold and hopefully you get more value from it over time. So it’s still an investment vehicle instead of an everyday currency that you’re going to trade. I don’t know if you buy a water right for two dollars. You know that’s not the function of what Bitcoin is and Bitcoin will never be that there are other block chains being created that will be more along the lines of everyday commerce. But bitcoin will always be that investment vehicle just like gold. So if you think about it like that and its legitimacy definitely but once you stray into the idea of it being an everyday vehicle for just day to day commerce it definitely is not legitimate.

[00:19:50] PAT: That makes some sense. You know news came out this week too though that bitcoin can buy U.S. citizenship and one of the world’s happiest countries right now. It’s called Vanuatu. It was ranked the sixth happiest country on the planet. They’re accepting it is a valid form of currency. You know you can basically pay the equivalent of $280000. You and your family of up to four can receive passports from what the New Economics Foundation which is UK based think tank called The Fourth happiest country in the world. It used to rank number one back when that was published in 06. But it looks like you know the market is a little bit iffy over there. There’s not a whole lot of predictability with it. And I think they’re kind of trying to capitalize on this new trend but new Fed if you will.

[00:20:33] AUSTIN: Yeah it’d be interesting to see how many people actually buy you know and become a citizen of that country it’s definitely interesting call. I like it just from a PR standpoint. You know it’s it’s a chain of islands that clearly it’s tropical You know they want to entice tourism. So they’re saying hey what’s a good place right now. They clearly talked to somebody with some intelligence that said hey Bitcoin’s super hot right now you could just sell citizenship to your country and in turn make whatever their value is on Bitcoin so maybe they’ll do a quick flip and turn that into feed for whatever their currency is on their islands and then the government just capitalizing created more liquidity. So I definitely see that as a great PR play for them. And also just in terms of what Bitcoin is becoming it is just while the functions that are occurring because of this you know I would have never thought that a digital currency and currency would equal citizenship in a country let alone thousands of dollars in U.S. dollar equivalents.

[00:21:27] PAT: Right. Yeah and as we talked about a little bit earlier I would be very wary of the current price anything that spikes like this is bound to drop again.

[00:21:35] AUSTIN: And just with the emotional buys that occur as the price went up this has to be some sort of a mini bubble in itself. We’re not talking about you know the entire currency it’s still going to be legitimate trading vehicle for a period of time. But the current price of hitting almost $6000 per bitcoin that’s going to have to drop to some degree.

[00:21:52] PAT: Right. Well when you say emotional buzz what do you mean by that you mean people that are acting on gut instinct without knowing very much about the currency in the market or do you mean more people who are just trying to you know what like what do you mean by that.

[00:22:03] AUSTIN: Yeah I think it’s emotional by occurs when you said it when no analysis is done on the investment vehicle so I’m sure we’ve seen this countless times with things that go up and down in the market all the time. So when large spikes occur people hear about it from their friends or maybe an investor and they want to hop in because it’s the hot thing because it’s cool and hey I don’t want to miss out on this opportunity to make a quick buck. And that’s totally what you know emotions driving that. That’s not an analytical decision to make either you know a long term stay that’s going to yield X amount over a period of time.

[00:22:35] PAT: You know this is just based on what the market is currently saying and what maybe others are saying to you is just trading you know it’s it’s just it’s not really long term holds and investments you’re not trying to create some kind of Bitcoin or cryptocurrency portfolio. You know you’re trying to basically flip it. Make some money so you can then invest some money elsewhere. It sounds pretty similar to something that we discuss our last halves. Remember John brought it up. Talking about the tech bubble and then the tech burst. You know I feel that you know you and I have a good understanding about it John has a good understanding about it as well. What are some commonalities that we’re seeing between the kinds of emotional buys you’re seeing then and now.

[00:23:15] AUSTIN: Well I mean we’re pretty young at the time so I don’t have a ton of data. But I mean I know my dad used to talk about all the time and it’s pretty similar in the fact that you know the stock price if dotcoms were just skyrocketing right. And people said you know this is the future we’ve arrived at what you know investing will be of what company companies are there on line. And this is going to be the norm now. And we’re seeing it not sustainable so a lot of those companies didn’t have functionality for you know that it was sustainable for long periods of time so their business model wasn’t built for success so I think when you when you look at bitcoin some things about I guess the overall model is great for a longtime hold or you know it has some sort of function because it was the birth of the block chain which is in itself incredible technology but it definitely has a lot of similarities because everyone’s into it. You hop on. You ride the ride the wave because you think it’s going to go up and then eventually the crash occurs because the people that have been in it for a while they go. All right. I’ve made such a large amount of profit. We’re going to sell which triggers then the cell wall to occur.

[00:24:18] PAT: That’s pretty interesting too that you’re kind of talking about how it might not be a long term play. I’m reading something right now which is the point blog talking about how Putin you know obviously the president of Russia issued a executive order that you know he’s trying to order his own country to develop their own cryptocurrency. This is after a meeting that Putin had had with Russia’s top regular’s where he instructed the central bank not to create unnecessary barriers to crypto currencies. What does that say. You know when another world superpower is is basically bought in at this point is trying to get into this space. Do you think that that adds to the legitimacy or is this just a ploy to increase competition with what has predominantly been a U.S. heavy market place.

[00:25:07] AUSTIN: You know I think that goes back to the point I was saying of functionality of the block chain in everyday use so what the electronic Wrubel would be is more of a day to day commerce situation where you know they want people to be able to buy and sell on a regular basis so you know if you go to the store you can do you know e Wrubel instead of just the you know the tangible Wrubel that you would have in your hand. So you know I definitely it’s going to be interesting to see what they do with that because what you have to worry about is price inflation occurring because of a decentralized market. So at its core block change technology Kryptos are decentralized so a government stepping in a centralized figure stepping in and creating a block chain. I don’t see how they could dictate the price unless they hold the value of the currency so unless they have the capability of holding 51 percent of the market let’s say the majority you know that price will inflate rapidly depending on who’s holding what.

[00:26:01] PAT: And you’re never going to be able to see that because it’s anonymous I think it’s interesting to talk about how much market share they can have by you know getting into you know they would have to have a majority of the market share to be that kind of potent. What I’m seeing right here you know regarding the regulation of crypto currencies Exactly. The minister from Russia explained that the creation of the crypto ruble does not equal the legalization of Bitcoin or any other crypto currencies just kind of goes back to what you were saying before it would be used for everyday commerce. I’d like this a little bit more like an Apple Pay solution or something like that as opposed to you know legitimate cryptocurrency.

[00:26:37] AUSTIN: Right it’s a vehicle for transaction to occur and not a dollar if you will.

[00:26:41] JOHN: I think another interesting part when it comes down to the technology of the block chain because I think that’s the main thing to stress here is the actual technology right now at this price that’s being inflated up to almost you know $6000. Right. That’s what the technology isn’t right. The technology itself is what people should be looking at. I mean I’m reading this now where Julian Assange of WikiLeaks. He turned 50000 per percent profits on the bitcoin that he used because his credit cards were blocked by the government and that’s all because of that technology. So that’s really where I see you know the benefit of any. Anything to do with the block chain coming from rather than all of these rumors all the news that you see because you can scroll through any you know crypto blog right now and it’s all mixed news from the same source and it’s that’s just how it is so just a world of uncertainty. I think the focus for people who are trying to learn about this stuff should be on the technology not on the price not sitting there looking at the price all day long.

[00:27:37] PAT: Is that because the development of the technology is like we were talking about how it’s not a long term investment. But the technology the existence of that technology has other applications outside of crypto.

[00:27:49] JOHN: Oh yeah the technology is the long term play. The price is never going to be the long term play. I mean it will once people actually latch onto that technology but I just think in the midst of all this craziness that’s going on with especially with governments involved in everything like that. It’s the technology at hand.

[00:28:03] AUSTIN: Yeah he’s nailing it on the head with the technology. If you think about what Bitcoin is and what a block chain is it’s it’s a digital Ledger. So it is that has the capability of keeping record. And that in itself is you know at human core what we want we won’t be able to keep records of transactions certain data you know verification of identity if you will so the block chain allows you to do that just in that digital setting. So you know if a company is saying I want to be a block in company that doesn’t mean they’re necessarily going into commerce or transaction. You know they could be saying I want to go into a block chain because I want to create a bunch of ways that people can hold their data on the block chain or I want to create a block chain so that people can how is different verification aspects of when they sign into something that block chain will hold these people’s identities and they’ll be able to get into this system so the block chain has led to a very massive change in what we consider to be technology. And it’s very exciting to see what will occur with Barclays because we see big companies like IBM or big banks like Chase that are going to be able to utilize this for record keeping for Ledger keeping for data usage.

[00:29:09] JOHN: Yeah I think of a thing that’s lost here is the steady growth in the steady play of the technology starting to make the price you know gradually jump up and run little spurts of high prices and then dip that is it’s whatever you know. And the technology gradually growing is what’s going to keep that long term appeal. And I’m looking at a tweet here from Kim Dotcom and he says this is this is just playing to the value of the tech launch technology over the years. If you invested $10000 into bitcoins seven years ago you’re now were six hundred forty four million dollars.

[00:29:45] PAT: That is an insane number I can’t even conceptualize how big that that should be the news you know what I mean right.

[00:29:51] JOHN: Should be the thing that’s like this value is so huge. Just over the past few years. Not really big jump up.

[00:29:57] AUSTIN: And in those unregulated amount of money also so you know there’s no S.E.C. that’s in there. You know the IRS will hopefully get some money out of that via taxes at some point if it ever hits a U.S. bank account. But as of now right as of now right that’s untaxable dollars sitting on the block chain in someone’s wallet that you know they just have right there keeping 100 percent of that minus you know whatever an exchange would take to move the cash or sorry the crypto but that’s in itself is incredible and I think what’s driving up the price as well as a lot of probably a lot of volume you know people with a lot of cash are seeing this as a way to move money back and forth between you know different investments. Yeah whatever that may be for them without being taxed and that in itself is created this just widely different idea of what money is and what investments are. Because if you can go on taxed I mean it really there’s just unstoppable amounts of things that you could do right.

[00:30:50] PAT: I think that’s something that people it’s like a dread that people have when they make the U.S. dollar they know you know it’s a common thing nothing is certain but death and taxes you know you’re going to pay 40 percent of your paycheck to the government to help build highways create infrastructure societal infrastructure. And I think the benefit that people see is that as that notion increasingly becomes a little bit more of a pain point you’re seeing people embark on these other avenues where they’re not going to have to deal with that. And this is a great way what it has shown to be a little bit of a you know viable way to increase your net worth without having to sacrifice in the way of your contribution to the government. My question though is we talk about how the technology is growing at a steady rate. We’ve seen technology you know across like the theory Embarq chain and things like that really playing a big part. But we have still despite that fact seen the value of the Bitcoin jumping all over the place. How much of the value of the Bitcoin do you think as of right now people are attributing to the technology versus just speculation.

[00:31:53] AUSTIN: I mean when you look at Bitcoins block chain technology versus pretty much every single block chain that’s been created since then there’s just they’re just not up to par even remotely because it’s nothing dynamic about it. So that block chain is singular in a sense that its sole purpose is for transactions to occur involving Bitcoin where you see as we’ve talked about other blocks being created off a theory where they’re dynamic in the sense that they can store data you know they can have different functions of finance occur such as smart contracts. You know you know legal legally binding smart contracts to occur you know outside of data usage you know verifying identities so this functionality is vastly superior. So the way I say it in just going back to Bitcoin is it’s the leader in a sense because it was the first one. And you know that’s what’s really tying this is people placing so much value on it because one it can be mind in two. It’s the first one.

[00:32:47] JOHN: I think if you look at other coins as well smaller ones you’ll find a lot of interesting stuff behind the technology that’s coming out. I mean the one that we’ve been looking at is Walton coin and that’s all based on RFID and it’s basically an exchange based off of actual inventory. Right. So it’s it’s it’s tied back to a technical cryptocurrency that’s tied to an actual tangible object such as how the dollar was what it was on the gold standard right. And is that one going to be super successful. I don’t know. Maybe but that technology people coming out with these kinds of ideas is what’s really cool to me.

[00:33:23] PAT: It’s the exciting thing about it it seems like it’s a whole new digital gold rush of sorts. People want their piece of the Bitcoin pie. I think though you know going back to the big question at hand are they legitimate and not you know let’s take a bigger scope of that question. They might not be from what I’m hearing a legitimate source of currency as a standalone but they are legitimate in the sense that they’re here to stay because that technology that these other tokens are being built on. Am I wrong by that assertion absolutely nailed it.

[00:33:50] AUSTIN: I think that if we could drive home one point today it’s that they are legitimate because of the technology being created because of the digital Ledger aspect of it this is a new form of record keeping. You know it’s much more dynamic and aspect of that. And you know it’s going to have a lot more usage in our growing technological environment that everyone wants and these big companies also want. So I think that that’s where that legitimacy lies.

[00:34:13] AUSTIN: All right hopping into segment after our main conversation year we’re talking what did Amazon take over this week and this week they took over sportswear.

[00:34:27] PAT: That’s right. Amazon is tapping into some of the bigger athletic apparel suppliers. They’re trying to make private label sportswear. This is again this is an article that I’m getting off of Bloomberg right here. And according to this article it says that people who are familiar with the matter basically say that Amazon is setting the stage for further upheaval. My reading in an already tumultuous industry. So basically they are working with Lot industrial company and a textile company which are Taiwanese suppliers and they have done work with some of the biggest names in sports where they’ve done work with Nike they’ve done work with I believe Puma Lulu Lemon Under Armor so they have a really keen sense of expertise when it comes to making high performance sportswear. And you know the funniest thing about this to me is that Amazon is basing this on you know search data. They’re basing this decision on you know missing gaps in their inventory based on search. They see customers searching for a certain type of shoe or skirt. They don’t see much of a selection from any of their established brands. Amazon has the purchasing power to step in there and try to fill that gap.

[00:35:46] AUSTIN: Yet I see this as a new age monopoly if you will Amazon has become this massive conglomerate where the vertical integration is occurring across multiple markets so obviously there are going to be the retailer on their platform their e-commerce platform and now they’re also the supplier to themselves. So this is just you know another where they’ve done this with wholesome foods as well where that you know vertical integration of that where and now where does it stop with them. It’s hard to say but it’s very interesting to see them stepping into yet another vertical.

[00:36:16] It’s pretty funny when we started this segment initially I think we were kind of like oh this will be funny. Every once in a while it probably won’t be a weekly thing. No. Every single time that we have recorded an episode we have had the opportunity to talk about a new venture that Amazon is exploring and this is just the newest one. Like you were touching on this is called vertical integration and what that basically is is where a retailer will start buying up the supply chain. So what they’re doing is they’re buying the manufacturers of these products. And because of Amazon’s low holding costs you know they’re not going to charge any kind of inventory cost to themselves they’re limiting overhead.

[00:36:51] PAT: And I think the thing that’s scariest about some of these other you know for some of these other sports retailers in particular is that this has the opportunity to undercut their prices with similar quality. We’ve already seen Lululemon share prices dropped by 4.9 percent since this. Yeah four point nine percent to fifty seven dollars a share since this news came out. Nike slipped even though obviously Nike is a massive company its shares are going to recover. But you know it was a marginal dip right when this news came out and basically what that means is just that you know there’s speculation around you know Amazon being that player in the space. And what we I think had all considered to be a very saturated and controlled market and this just adds some validity to that notion that Amazon is you know turning into that kind of monopolistic conglomerate. Obviously not to vilify them too much here we don’t want to use you know jarring language by any means but that’s really what they’re turning into. I know John and I were talking off the air about a 2400 word research paper that Yale Law at Yale Law put out.

[00:37:54] JOHN: Yes there’s a story on the Washington Post about this 28 year old law student named Lena Kahn So the story is actually about her but her whole paper was about Amazon and there’s a quote in this article and it’s all about anti-trust so anti-trust ensuring that you know there’s fair competition in the industry.

[00:38:14] PAT: Right. This was implemented because of the Rockefellers and things like that right. Steel industry oil industry big time big market players.

[00:38:24] JOHN: Right. So this is what the Washington Post says it says “Earlier this year the Yale Law Journal published a 24000 word note by Lena Kahn titled Amazon’s anti-trust paradox. The article laid out with remarkable clarity and sophistication why American anti-trust law has evolved to the point that it is no longer equipped to deal with tech giants such as Amazon.com which has made itself as essential to commerce in the 21st century as the railroads telephone systems and computer hardware makers were in the 20th century.”

[00:38:55] PAT: Two things on that first of all John that is the smartest you have ever sounded. Second of all we’re seeing you know those are some big industries we think about the market cap when it comes to the oil industry railroads telephone industries you’d think big companies as DGP PG&E you know in any kind of steel manufacture for these railroad companies that was what Rockefeller had founded back in the day. These antitrust laws too that he’s talking about had originally been intended for those kinds of players people who could legitimately push every single other person out of the marketplace. And what we’re hearing now is that you know these antiquated laws are just not equipped to handle Amazon.

[00:39:35] JOHN: Well they didn’t know back then either. When they started those anti-trust laws I mean they did it because those people were taking over.

[00:39:41] PAT: Right it was an immediate fix it was a Band-Aid but it wasn’t stitches. Right.

[00:39:44] JOHN: So now you’ve got this totally new thing. Nobody expected this. You know what I mean so Amazon just swooping in they’re taking everything and there’s no way to really curb that.

[00:39:53] PAT: And it goes back to some of what we’re talking about earlier their accessibility to consumer data they’re seeing that online apparel sales. Amazon is a great indicator as almost like an index for the e-commerce marketplace right. You can basically take Amazon trends because of its search ability the number of Skewes that it holds online some of the brands that they hold online and take a temp check on how a certain industry is doing its popularity within the consumer demographic as a whole. And what they’re seeing is that online apparel sales accounted for 19 percent of all apparel sales in 2016 which is up from 11 percent only five years earlier. And you think about how big that market is 19 percent versus 11 percent that’s an 8 percent overall increase in less than a decade. People are obviously putting a bigger priority on health than they ever have before. Education is out there. All over the place with the accessibility the Internet and smartphones to understand you know best practices for living a healthy lifestyle. People are more engaged with apparel brands than they’ve ever been. Conversely apparel our athletic apparel brands are branching off into other avenues. Street where skateboarding you know extreme sports and I think this is just going to be the beginning is this.

[00:41:02] AUSTIN: Is this the end of Adidas as a brand. Because what just occurred with Adidas right as they had this whole issue with all the college students were they were paying the college athletes you know which has greatly affected their share price and will affect their revenue going forward. So what I see Amazon just is they just took advantage of a big time player faltering and starting to lose their market share and they said hey well you’re already losing market share so why don’t we just take the rest of it right. We’re going to cut into the revenue you can get. And we’re also going to make razor razor thin margins because we own the entire supply it can afford it.

[00:41:35] PAT: Exactly. They control the supply chain. They can afford it. I think that it does have to do a little bit with you know a deal is faltering. We saw a massive deal where you know UCLA as a prime example which had at one point been an ATM or a Adidas school just you know had the one of the biggest sports contract ever signed with under armor under armor just pushed out one of Adidas top you know top placements.

[00:42:01] AUSTIN: Yeah. And yeah Adidas is starting to lose these top schools which was you know really good for their brand. Obviously you want to be with the elite athletes because it makes your product look better for the consumer. But you know as that falters and we’ll have to see what Amazon comes out with in terms of what their brand will be called. But this is just a totally brilliant move if you will by Amazon to just continue to steal market share from companies that are very vulnerable.

[00:42:25] PAT: Exactly. That’s what we’ve seen. We talked about before with the chosen foods or with the whole foods example from a few episodes ago where basically they’re just going to take the you know the the products that are the most widely shared horizontally across those competitors and make their margins thin and acquire market share. And now that there’s less big competitors in the space because some of these you know retailers like Under Armor and Lulu Lemon and Nike you’re making moves on some of the smaller ones like Adidas and Puma. There’s less prices to have to match. They can maintain their level of competitiveness while not having to take their margins down as far as they would in a saturated market. So very interesting to see. I want to see how this plays out I’m sure are going to end up covering it again on another. What is Amazon taking over this week segment.

[00:43:11] AUSTIN: Yeah we’ll see you next week with that one.

[00:43:16] PAT: All right you guys jumping in to our final segment here digital questions of the week. Again these are user submitted questions through our social channels or Twitter and or Instagram specifically if you want to submit a question in the future it’s at flip switch cast for both. Again that’s at flip switch cast the first question is going to be for John user wants to know how often should I update my web site. That’s a little bit general. So I want to you know specify this How often should I be updating the visuals and the creative components of my web site.

[00:43:46] JOHN: Depending upon who you are if you’re a business. It’s always good for seasonality to change your visuals. Tailor it to whatever is going on remain relevant is of your business you know keeping in tune with that with the season is always good if you’re an individual if you’ve got new work if you have a portfolio always be updating that as much as you can. I think updating your website is the only thing that keeps it breathing. So in any form bring it back to a general sense. Always updating is probably the best thing.

[00:44:17] PAT: And when you say always updating it just from my own understanding how often would that be weekly if you can.

[00:44:24] JOHN: If you have enough content to do that. If not I would say on a monthly basis and you know just keep it in front of people.

[00:44:30] PAT: All right yep. Good. Good point to make. If you if you have an agency handling your Web site make sure they are staying on top of those web site updates. It is crucial for both seasonality and performance as a whole. Second question is going to be for Austin this is just very basic but should I have a blog on my web site.

[00:44:47] AUSTIN: Yeah absolutely. Every single web site should have a blog because of the value that it provides so you know a wrecking factor for Google is FRESH content which actually piggybacks on what John said. So you need to be providing fresh content for Google to see on a very very consistent basis. The other side of that is what people are typing in. So if you you know the core of your business that key word that might describe your business is probably not a transactional keyword. And what I mean by that is people are entering the discovery phase when they enter in a search query on Google. So if you do not provide a piece of content that is you know tailored to that discovery aspect you’re not going to be able to rank for that. So what I mean by that is let’s say that you know someone types in wire transfer internationally what comes up is not a you know different Web sites that offer that product what comes up is a blog post about to do a wire transfer or the different types of wire transfers for two that occur. So it’s very important to make sure that you blog and answer those questions that pertain to your business.

[00:45:50] PAT: Well said lots of great insight there. All right you guys just about wraps everything up for us on this episode of flip the switch again. If you ever do have user questions for us it’s going to be at flipswitchcast for both Twitter and Instagram. Again that is at flipswitchcast. This has been Pat Kreidler, Austin Mahaffey, John Saunders And Joe Hollerup signing off.

[00:46:33] End.



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