The Best One Yet
👛 “The ROI on the IRS” — America’s 12x tax return. Alani Nu’s $2B hot girl drink. Alibaba’s new religion.
Mon, 24 Feb 2025
Energy drink Alani Nu sold to Celsius for $1.8B… so we explain how to pick an acquisition price.Alibaba is the Amazon of China & its stock has doubled… because AI is its new religion.We just found the ROI on the IRS… For every $1 we put into the IRS, we get $12 back.Plus, Birkenstock just argued to a judge that its sandals should legally be art…$CELH $BABA $BIRKWant more business storytelling from us? Check out the latest episode of our new weekly deepdive show: The untold origin story of… the Patagonia Fleece 🐑. Subscribe to The Best Idea Yet: Wondery.fm/TheBestIdeaYetLinks to listen.“The Best Idea Yet”: The untold origin stories of the products you’re obsessed with — From the McDonald’s Happy Meal to Birkenstock’s sandal to Nintendo’s Super Mario Brothers to Sriracha. New 45-minute episodes drop weekly.—-----------------------------------------------------Subscribe to our new (2nd) show… The Best Idea Yet: Wondery.fm/TheBestIdeaYetLinksEpisodes drop weekly. It’s The Best Idea Yet.GET ON THE POD: Submit a shoutout or fact: https://tboypod.com/shoutouts FOR MORE NICK & JACK: Newsletter: https://tboypod.com/newsletter Connect with Nick: https://www.linkedin.com/in/nicolas-martell/ Connect with Jack: https://www.linkedin.com/in/jack-crivici-kramer/ SOCIALS:Instagram: https://www.instagram.com/tboypod TikTok: https://www.tiktok.com/@tboypodYouTube: https://www.youtube.com/@tboypod Anything else: https://tboypod.com/ Subscribe to our new (2nd) show… The Best Idea Yet: Wondery.fm/TheBestIdeaYetLinksEpisodes drop weekly. It’s The Best Idea Yet.See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.
Chapter 1: What is the ROI on the IRS?
I can't believe it, Jack. Oh, I thought you were going to say day 54 of me still being here. Still don't have the eye toilet. Still don't have Jack's third kid. Jack, three stories for today's show. What do we got on the pod, man? For our first story, Alani Nu is the Kardashian of energy drinks. And Alani was just acquired for $1.8 billion by Celsius.
So we'll explain how they got that very specific number. For our second story. Alibaba is the Amazon of China, and its stock has doubled in the last year. But their founder disappeared for years, and now he's back. And that detail tells you everything you need to know, Jack. And our third and final story. Since the IRS has been targeted by Doge for job cuts, we just calculated the ROI on the IRS.
For every $1 we put into the tax agency, we'll tell you what we actually get paid. But yetis, before we hit that wonderful mix of stories, Oh, what a mix of stories. Love the mix. What is art? What is art, Jack? Is it a painting, a sculpture, a song, a film? Or is art a Birkenstock? Because here's the news, Yetis. Birkenstock legally filed for its sandal to be a classified work of art.
Yeah, they claim their footwear should legally be protected just like a Jackson Pollock painting. Why are they doing this? Because of dupes. Cheap Birkenstock knockoffs are everywhere. Redditors have gone rabid with recommendations for knockoff Birkenstock brands every single day. And Birkenstock is sick of it. So they want artistic copyright protection to stop the copycats. However, hear, hear.
A German judge disagrees. As fashionable as Birkenstock may be, they say sandals are legally not art. However, here, here, we respectfully disagree with that judge. Your Honor, may I approach the bench? Because the cork foot, Brad, is it not a collage? Your Honor, is the brass buckle not a sculpture?
If art is the expression of human skill, is not the Birkenstock sandal but the Mona Lisa of the foot? I mean, honestly, art touches the human soul. But the Birkenstock touches your literal soul. Yeah, it is. Nick and I didn't go to law school. We didn't go to art school either. But we're pretty sure that Birkenstock is the new body of child. If you know, you know.
Jack, let's hit our three stories.
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Chapter 2: Why was Alani Nu acquired for $1.8 billion?
15 years before this song, two boys from the Northeast met in a dorm. They had an idea to cause a cultural storm. It's the best one yet, but the best is the norm. Jack Nick, that's it. I don't even think they need to practice. 50%, that's a fat tip. T-Boy City on your at list. If you know, you know, cause we ready to go. We can't wait no more, so just start the show. Start the show.
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Chapter 3: What makes Alani Nu unique in the energy drink market?
For our first story, Celsius Energy is buying energy drink icon Alani New for $1.8 billion. Alani is the Kim K of energy drinks, so we'll explain its acquisition price. Jack, let's go back to 2023. Do you remember we did a story on Celsius and what was Celsius energy stock doing at the time? It was the top performing stock of the last five years. Celsius stock was up 4,000%.
An energy drink stock. Now, since then, Celsius has cooled down. Yeah. Literally. Yeah. Their North American sales shrank for the last two quarters and the stock has fallen 75%. But not anymore. Because on Friday, Celsius stock surged for its best day on the stock market in years. And why was that, Jack? Hot girl energy. Boom, here's the news.
Celsius acquired fast-growing energy drink startup Alani New for $1.8 billion. you can't beat them, buy them. Alani knew. The female-focused energy drink slash supplement slash protein powder brand, baby. It's monster energy if it only had X chromosomes. Alani knew. The cans are pink and the cans are poppy. If Barbie did SoulCycle, she'd pound an Alani afterwards.
It's basically the fifth Kardashian, but it can do Pilates and a triathlon in the same day. Now, here's what Nick and I found fascinating about this story. Despite all the attention recently on liquor, beer, sparkling water, spike seltzer, prebiotic sodas, one beverage category is beating all the others. Energy drinks. It turns out 12-ounce energy drinks are outpacing coffee these days.
That's why every influencer has launched their own energy drink. It's a booming market. We've been even told we should launch an energy drink because we hit the takeaways pretty hard. It's a good amount of energy we got in the show. Because Gen Z has ditched double-digit lattes for single-digit Red Bulls. But here's the interesting detail Jack and I want to focus on. Jack, what's the stat?
There are twice as many men buying energy drinks as women. Yeah, your buddy Timmy is the one who's pounding a 10-hour power these days. So there's two ways to interpret that data. One is that women don't like energy drinks. Okay. Or maybe there's just no energy drinks marketed to women. Well, Katie Hearn, the fitness influencer, bet on the latter of those two interpretations.
And she created a brand that has become the Skims of Supplements. And now her Alani new sales are up 80% in the last year. And she just sold the brand for 1.8 billion bucks. Like we said, hot girl energy. She realized basically that the problem wasn't the demand of energy drinks among women. It was the supply of energy drinks for women.
Nobody was supplying the market with lady-focused energy drinks. But besties, Jack and I were studying this story and we thought, you know what? Alani New is actually the perfect case study here. Because how did the two sides decide $1.8 billion was the price for this deal? Well, the answer is our takeaway. So Jack, what's the takeaway for our buddies over at Alani New?
The way that Wall Street decides price tags is money follows multiples. Yeah, it is. Why did a fast-growing women's energy drink with $600 million in sales get acquired for $1.8 billion? Every deal has its own negotiation. True, true, true. But that number wasn't random. In fact, we could have predicted... the $1.8 billion price.
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Chapter 4: Why is Alibaba considered the Amazon of China?
But Jack, let's pause the pod for a second and dig into that one a little more. Why is Alibaba back, baby? Because Alibaba found a new religion which President Xi worships. It's called Artificial General Intelligence. Artificial General Intelligence. We'll explain that in a second. But in the meantime, Jack, let's share that hero stat that sets all of this up.
Last week, Microsoft CEO Satya Nadella said that artificial general intelligence would triple the world's GDP growth from 3% today to 10% tomorrow. And since leading that is China's priority, their crackdown on tech is over and Alibaba's Jack Ma is back in their good graces. And now that tech is blessed by the government again, Jack Ma's Alibaba announced a new mission for his company.
And here it is. Our first and foremost goal is the pursuit of artificial general intelligence. It's shortened to AGI. AGI is when artificial intelligence is so powerful that it is equal or greater than human intelligence. You will be speaking with computers in such a way you will have no idea if it's your buddy Timmy or if it's bot Timmy. Here's the crazy part though.
With AGI, Jack Ma could tell his AI model, hey, run the company to maximize profits. Then he could just retire, sit back, and watch as AI performed his CEO job better than he would have. That's why AGI is Alibaba's new religion. It could let humans just... Stop working, assuming they have like a desk job, because your desk job will be performed better by your AI chatbot.
And China's so excited about that new religion, they're supporting Alibaba, and the stock has nearly doubled. Side note, Alibaba was also in the news last week because they partnered with Apple. All iPhones in China are going to be powered by Alibaba's AI. Siri. is kind of an Alibaba employee too. So Jack, what's the takeaway for our buddies over at Alibaba?
From an investing perspective, Alibaba is a hedge on American everything. Yetis, Alibaba is the Amazon of China. It's worth $400 billion, its core business is huge, it is profitable, and it is e-commerce. But it also wants to become the open AI of China, pursuing the highest form of artificial intelligence.
Well, right now, America's economy is bigger and growing faster and is more tech advanced than China. But investors always want to hedge. And Alibaba, a stock traded on the New York Stock Exchange, could be that hedge. This is not investment advice. We used to own the stock. We don't even really own it anymore. But this is just really interesting to imagine. What if China wins the trade war?
What if China wins the AI race? If those things happen, then Alibaba would win too. So from an investing perspective, Alibaba is really the hedge on American everything. Now, a quick word from our sponsor.
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Chapter 5: What happened to Jack Ma and why is he back?
For our third and final story, Doge has turned its chainsaw toward the IRS. Last week, they cut 6,700 jobs at the tax agency. So we calculated the ROI on the IRS, and it may actually be the best investment America can do. Okay, we'll hit the numbers, Yetis. But in the meantime, Jack, one of the most poetic descriptions of a government agency we have ever heard. Can you please share it with us?
Boom.
Boy, are we glad that we have them. Well, Donald Trump thinks that there's also waste, fraud, and money to be saved in the IRS Internal Revenue Service. So Elon's doge jumped in last week. Elon axed 6,700 IRS workers on Thursday, just as we're all preparing to file our taxes. Some more of those numbers, that represents 8% of the 83,000 people working full-time on taxes at the IRS.
Now, there is a huge efficiency opportunity at the IRS. Yeah, there is. If we cut waste or if we could file taxes online, like someone deserves an award if we could make that happen. The IRS has a $16 billion annual budget. If we can match these job cuts with some kind of tech automation, that would be a huge efficiency win for everyone.
I don't want to double down on this, but again, there were rumors last year Doge would create a free tax app and you could file online. Again, huge opportunity. Because in America, you basically have to pay a hundred bucks to one of those two tax filing companies so they can file taxes for you. That doesn't have to be the way it is.
Not to play Carmen Sandiego here, but over in Estonia, they do all their taxes online and it takes three minutes in Estonia. Well, so far, the IRS cuts have only focused on cutting jobs. We don't have a free tax app yet. So most of those firings, by the way, they happen to be the most junior employees at the IRS. So the biggest efficiency gain to our tax system, it's actually one clear answer.
Simplifying the tax code. Jack and I aren't accountants, but 70,000 pages of tax code feels kind of long for the tax code. We should point out, though, that simplifying the tax code would require Congress. the best investment in our tax system also happens to be very, very clear. More tax enforcement.
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Chapter 6: How is AI becoming Alibaba's new religion?
Because yetis, regardless of how long, how short, how much you like or dislike taxes are, how do we actually make sure the people who owe the taxes actually pay them? The answer is our takeaway. Yes, it is. So Jack, what's the takeaway for our buddies who are everyone paying taxes? The IRS has the biggest ROI in all of government. We got the receipts. Yetis, here is the hero stat.
For every $1 that we spend in tax enforcement, we collect $12 in tax revenue. That is a 12x return. The amount we spend on tax enforcement gets 12 times as much back to us. to America. And the flip side of that is that every $1 we cut from tax enforcement, we end up losing $12 from people who don't pay the taxes they owe.
Because yetis, the reality about the American tax system is that people cheat. And the likeliest to cheat happen to usually be the wealthy. Because most taxpayers' taxes are paid automatically by their employer. We see the withholding taxes line on our W-2. That's taxes automatically paid. But the rich make most of their income through investments, so they mostly self-report the taxes they owe.
So follow us here. Without tax enforcement from the IRS, it's easier to cheat. Because if there's no fear of being audited, then there's basically no consequences to cheating. So add it all up, besties. And cutting waste at the IRS, simplifying the tax code, yeah, those are huge wins by Doge and Congress if they happen. Fantastic. But cutting enforcement would be a huge mistake.
We wouldn't save money. We'd actually lose 12 times as much money. Because of the IRS ROI, every $1 spent on enforcement yields $12 in tax revenue. Jack, could you whip up the takeaways for us to kick off the week? Celsius acquired Alani New, the leading energy drink for women, for $1.8 billion. How did they decide on that price tag? Well, it was three times sales because money follows multiples.
For our second story, Alibaba is back in the government's good graces now that it's pursuing AGI. From an investment perspective, again, not investment advice, Alibaba is a hedge on American everything. And our third and final story. The IRS has cut 6,700 jobs. The big question is whether those cuts are waste or tax enforcers.
Because for every $1 spent on tax enforcement, we get $12 in taxes collected. That is the IRS ROI. By the way, that's according to a paper published this month in the Quarterly Journal of Economics, which Jack and I read. Ha ha ha! Every three months. But yetis, this pod's not over yet. Here's what else you need to know today. First, we got an update on the eggflation situation.
Shake Shack's CEO says that high egg prices are driving people to chicken and beef now. Because egg prices rose again last month, you're switching to burgers and wings to get your protein fix. So that increased demand for meat is eventually going to increase meat prices. What we're saying is eggflation could lead to steakflation. I know. No, you had a good one.
Second, Disney World is reportedly going to change their pricing strategy when it comes to theme parks. Disney is going to shift over to dynamic pricing, just like airlines and hotels. What we're saying is as demand spikes for Disney tickets, Disney is going to jack up the prices. And as demand falls for Disney World, they're going to drop the prices.
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