🙂 “South Park me” — ChatGPT’s animation studio. CoreWeave’s Snow White IPO. SoulCycle’ Fashion Stores

85.128 - 109.016 Nick & Jack

The Amby's, the Emmys of podcasting. The Grammys of podcasting. Because our new weekly show, The Best Idea Yet, it was nominated for Best Business Podcast. With The Best Idea Yet, we switched our careers, really, from a news focus to deep dives on the best products of all time. So Jack and I are heading to Chicago for the ceremony, but actually, we don't know if we won. We may have lost.

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We don't even know. Last year, you helped us win a Webby Award by voting for us, but this award is chosen by judges. So Jack and I are getting all dressed up in maybe tuxedos, walking the red carpet, and our fingers will be crossed. And we're up against some incredible competition. Oh, yeah. Another nominee in this category is How I Built This, the legendary entrepreneurship show.

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Full disclosure, that was the first pod we listened to like nine years ago before we started a pod. Yeah, that host, Guy Raz, he's actually one of our vocal idols. And now we're up there with him at the ceremony. So we don't know what's going to happen at the event, but we still just want to say thank you right now.

144.15 - 165.405 Nick & Jack

We've published 26 episodes of The Best Idea Yet, from The Happy Meal to Super Mario to Birkenstocks to Costco. This is kind of like a thank you speech, even though we haven't won. Yeah. We have a team of 10 researchers, producers, editors, sound editors at Wondery who make each episode come to life. And so many thousands of you who listen to us every week on that show.

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Our new show couldn't have been nominated for Best Business Podcast without your push and play. So yetis, celebrate the wins no matter what. And Jack...

379.517 - 398.9 Nick & Jack

So OpenAI just got record engagement, but the Simpsons it was copying wasn't compensated. And the AI only knew how to make stuff look Simpsons-y because it consumed Simpsons content, probably without the Simpsons' consent. Now we should point out Sam Altman, the head of OpenAI, tried to reassure everyone in the world.

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He said that his product will only copy the style of art studios, not of individual artists. Although we do have to ask, isn't that still kind of stealing? And what if they change their policy and do allow to copy the style of individual artists? So Jack, what's the takeaway for all our buddies in artificial intelligence? As the cost of creating goes down, the value of creativity goes up.

423.464 - 444.855 Nick & Jack

All right, yetis, let's break down those two concepts. The cost of creating something, that's never been lower. In seconds, you can upload a photo to ChatGPT, and it will create a cartoon version of artwork in the style of Pixar, if you ask it to. Now, that's creating. Creating is about execution, and the cost of that creating has never been lower. Thanks to AI.

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But creativity is the art of inventing an original thing. Creating is what millions of people did instantly with ChatGPT just last week. Creativity is Pixar reimagining animation in its own unique style 30 years ago. So the way Jack and I see it, with AI, we seem to just be creating multiple versions of someone else's creativity. That's why we think this is the time for an important distinction.

472.124 - 500.228 Nick & Jack

As the cost of creating goes down, the value of creativity goes up. For our second story, SoulCycle, the spin studio, is planning to launch a chain of fashion apparel stores. SoulCycle is going after Lululemon. Yeah. And it's all because of the Hard Rock Cafe. Okay, three brands you didn't expect to hear, but we'll explain. But first, Nick, where were you 10 years ago?

603.807 - 603.867 Jack

Wow.

604.427 - 627.907 Nick & Jack

Yetis, here's what Jack and I found fascinating about this story. SoulCycle aims to launch stand-alone clothing stores. SoulCycle thinks their brand is strong enough to take on Lululemon. Okay, we repeat. A workout studio is launching apparel locations without the workout studio. Just the apparel. And we get the strategy. It's cheaper to run a store than it is to run a fitness studio.

627.967 - 644.262 Nick & Jack

There's a lot of sweat to mop up on those post-spin class rooms. And to reach a wider audience, they're pulling a Facebook. They are. They're dropping the the. Uh-huh. They're cutting the word cycle out of the apparel so it'll just say soul on the butt of those leggings. So SoulCycle is the fitness business. Soul is the apparel business.

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In fact, the SoulCycle fashion store won't just feature SoulCycle branded products, will it, Jack? This is interesting. They're going to hold a range of different athleisure brands in their stores. Yeah, they're going to have Aloe, Bandier, Viore, the first athletic store we could find carrying more than just one athleisure brand. But we got curious.

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So we went back to the IPO paperwork from the IPO that didn't happen 10 years ago. That's right. And we discovered in that S1 paperwork that apparel was always a huge potential focus for SoulCycle. SoulCycle used the word spin just nine times, but they used the word apparel 17 times in that IPO paperwork. Because one out of 10 of their riders end up buying the apparel.

269.681 - 293.848 Nick & Jack

Or another similar request would be like, take my graduation photo, chat GPT, and make it look like the Simpsons. Or turn my engagement photos into Studio Ghibli artwork. Now, besties, the amount of computing required to do all of those image-generating queries almost broke the company. It was so popular last week that Sam had to limit the number of image requests that people could make per day.

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Now, besties, this is OpenAI's new 4.0 image generator. And full disclosure, we got blocked because we did so many requests. If you want to see what this looks like, pause the pod and go to our Instagram because we had some fun. Yeah, we posted a whole bunch of pictures of our recording in like a dozen different studio styles. So you can see Pixar Nick and Jack in the pod studio.

316.228 - 333.972 Nick & Jack

South Park Nick and Jack in the pod studio. Disney Princess Nick and Jack. The Simpsons, Barbie, you name it. We turned all of it. Wes Anderson style Nick and Jack. We whipped it up. Nick, I think you looked best as Powerpuff Girl. Jack, I thought your biceps were screaming in the Barbie version. I just want to throw that out there. This was fun.

334.352 - 359.164 Nick & Jack

But it also reminds us of the two scariest letters in artificial intelligence. And they're not A and they're not I. Yeah, that's right. The two scariest letters in AI are actually IP, as in intellectual property. Intellectual property is the legal term for original works owned by their creator and protected by law. Now, in capitalism, IP, intellectual property, is sacred.

359.284 - 379.317 Nick & Jack

We want to reward the creator to let them profit off their creation. So like Coca-Cola trademarks their logo and their polar bear animations because both are valuable IP. The Simpsons is protected IP, but what about an AI image created to look like The Simpsons? We're going to have to talk to our lawyers about that case.

500.288 - 522.345 Nick & Jack

Jack, I was taking Aitken Ackman's 5 a.m. booty burner ride over at the SoulCycle in Tribeca, baby. What do they call it? Atkins Army? Yeah, that's what we call it. That's what we call it, Jack. Yeti SoulCycle, the spin studio founded in 2005, or as they call it, a cardio party. I agree. I've only taken one class. I love synchronizing the music to the cycling, which is something...

522.705 - 542.578 Nick & Jack

Peloton doesn't do. Also, you were particularly good at that, you were, Jack. This basically is the company that started the boutique fitness trend as we know it. And the boutique fitness trend wasn't just a workout. It became spiritual for millennials. It was therapeutic. Instead of going to a church, a mosque, or a synagogue, you were worshiping at the altar of your SoulCycle instructor.

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Or at least many urban millennials were. Which is why in 2015, when we were in the East Village, SoulCycle filed to IPO with the ticker symbol S-O-U-L, Soul. Back then, they had $100 million in annual revenue. They had 300,000 monthly riders. They were profitable. They were going to be the first pure profit spinning stock. It was pretty exciting. But then, Jack, what happened?

564.549 - 585.217 Nick & Jack

Because I don't think that they went public, did they, man? They delayed the IPO. Then the pandemic happened, crushing attendance at their physical studios. And then Peloton, with their at-home fitness stuff, almost put SoulCycle out of business. Didn't see that coming. But besties, now SoulCycle is quoting Elton John, man. I'm still standing better than I ever did.

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Because today, SoulCycle is majority owned by Equinox Gyms. That's why SoulCycles are always located right next to Equinox. Full disclosure, I go to the one on Union Street. And Jack, I'm the guy in the back right next to the fan with the earplugs in. That's who I am these days. What? You don't listen to the music? It's a story for another pod. It's too loud for you?

682.898 - 703.277 Nick & Jack

Here's what SoulCycle said back then. Apparel gives us a larger share of rider spend and considerable opportunity to expand it. Well, 10 years later, they're capitalizing on it. So Jack, could you please tap that booty back, turn to the left, turn to the right, grab the weights next to you, and tell us the takeaway for our buddies over at SoulCycle. DeMargins in DeMerch.

704.338 - 727.886 Nick & Jack

the margins and the merch yetis a company spinning off its smaller apparel line into its very own business that's actually not crazy in fact that's what the hard rock cafe did remember the hard rock cafe yeah in the 90s that's what they did man you've probably not dined at a hard rock cafe since you were in orlando But they did have 300 restaurants at their peak.

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You may not have dined there, but we bet you've seen one of their Hard Rock Cafe t-shirts sometime recently. Because get this, in the 90s, Hard Rock Cafe opened merch shops even when there wasn't a restaurant there. Because just like SoulCycle mentioned 10 years ago, merch was their best profit opportunity. So SoulCycle is following in the footsteps of the Hard Rock Cafe.

749.679 - 766.529 Nick & Jack

SoulCycle says their profit margins on spitting are about 30%. But we bet their profit margins on $100 leggings are way higher. So SoulCycle is launching a fashion chain because da merch is where da margin is. Now, a quick word from our sponsor.

770.091 - 796.626 Jack

Every big moment starts with a big dream. But what happens when that big dream turns out to be a big flop? From Wondery and At Will Media, I'm Misha Brown, and this is The Big Flop. Every week, comedians join me to chronicle the biggest flubs, fails, and blunders of all time, like Quibi. It's kind of like when you give yourself your own nickname and you try to, like, get other people to do it.