2024 bankruptcies reveal economy's state, Plus-sized & trans beauty queens in pageants, and more

You know, we're spending more on paying back our debt as a United States versus—

The debt we're adding.

The debt we're adding. So we're spending more than our defense budget per year, and our defense budget is large.

I thought we're spending more on paying back our debt than the debt we're adding.

I think it's both. Yeah. And here's the thing. Last month, everyone was like, oh my God, you know, we added 250,000 jobs, but What wasn't reported was we lost 685,000 jobs, and there's 8.4 million people working multiple jobs right now. And so this account—you should follow this one, Neil. I think you would actually enjoy this account. You might follow it already. It's the Kobe Kobe C letter. Have you seen this one? So check this out.

No, I haven't seen it.

U.S. consumers have added $3.4 trillion in debt since 2020, bringing the total record to a record $17.7 trillion. Credit card debt alone is up by $400 billion during this period and reached a record of $1.3 trillion in Q1 2024. This is a 2 times faster pace than the 4-year run-up to the 2008 financial crisis. At the same time, interest rate of this debt has spiked from 16% to 23%. And you can see that over here in the black line. This is the annual interest rate. And then consumer credit outstanding. Look, it's like spiking over here in the red. And so all these things are pointing to, hey, it's not such a strong market. You're looking at potential bank failures in the United States. You are looking at a lot of commercial real estate. Those loans are coming due, right? And you see a lot of people like the building I used to— remember the office I used to have in downtown LA? That one sold for $150 million less than it did a decade ago.

Wait, what did it sell for? It was a nice office building.

Aeon downtown office sale. So it sold for sold for a bargain. It sold for 148 million. So basically, it was it was 300 million before, and a 1.1 million square foot office tower. So anyway, the point of Neil and I saying this right now: Okay, so how does this affect business? How does this affect marketing? Fact of the matter is, if Europe is starting to stimulate and Canada is as well, the only thing that we have now, the tool that these governments have, is to stimulate the economy, right? And, you know, that's not necessarily a good thing long-term, but for the short-term, that means hopefully things rip.

I hope so. It's just a question of time. I think we need to be patient. And I agree with you, there's a lot of issues that are out there that people aren't discussing. Like a lot of these commercial real estate owners, which there's a ton of commercial real estate throughout the whole world, but specifically in the United States, there's a ton. And interest rates are high. So when they all have to refinance and there's not as much occupancy, What are they going to do? Because their revenue is not as good. And you're starting to see people get creative. Like, did you see the baseball stadium that sold for pretty much a dollar? And then investors turned it into a— it was either apartment complex or a condo building.

Yeah.

And it was pretty cool. And they're showcasing the units and they're making money from it. But there's a lot of real estate that was built and it's going to end up being sold for less than what it actually costs to build today. And the main reason for that is, you know, there's not as much demand in certain regions, like in Southern California where Eric and I live, a lot of people don't go to the office, period. And yes, people are starting to have, let's go back to work. But some of these locations have the culture of, no, we're not going back to work. And I don't see it changing for a very long time. So it's either people got to be able to hold down the fort and have a lot of money in their bank account. In reserves, or it's just going to end up being where people are going to get really hurt. And like in the office building space, I'm seeing that people really want Class A office space, like really nice fancy office. And a lot of Class B and C are struggling to be like, well, if we're going to go back to the work, let's just get really nice office. And it's just much, it's cheaper than it used to be. And oh yeah, we don't really care for the B and C and the stuff that's Mediocre because a lot of people just work remotely or from home. Dude, check this out.

So going on, this is another post. So again, Neil, you should follow this account, the Kobisi Letter. Okay. So they look, they're so legit that they have the gold checkmark. And I think you have to pay $1,000 a month for that thing. So breaking, in the first 4 months of 2024, the US has seen 210 corporate bankruptcies, second highest since 2012. Okay. In April alone, S&P Global recorded 66 new bankruptcy filings. This is up 61, up from 61 in March and the 3rd highest monthly number since the 2020 pandemic. The most bankruptcies have seen consumer discretionary and healthcare sectors at 28 and 27, respectively. Higher rates for longer have— higher rates for longer have taken— have— are taking their toll on US corporates. Is this really a quote unquote soft landing?

Well, and that's just for the first half of 2024, because we're not even done for the year. And The numbers are already ridiculously high.

I think they're going to have to ease. Well, we'll know very quickly. Did you know this this coming Wednesday we're going to see the the inflation report and then also they make a decision on Wednesday too on whether they're cutting or they're holding rates?

Yeah, but they're saying that there's pretty much zero chance that they're going to cut at this one.

They probably need to wait a little couple more months.

But yeah, I don't know if they should wait couple more months or not. I'm not an economist. I just Hope that they figure it out because people are bleeding on all ends.

We would love that for them to cut it right now. But you know, if they listen, if a government official listens to this podcast, but wishful thinking.

And Eric and I don't know what's best for everyone. We just know as business owners, when rates were lower, even though inflation was higher, we were clipping much more growth and our revenue and our EBITDA than what the inflation was. So people like Eric and I were cool with it. But at the same time, that may not be good for everyone. There's people who work normal jobs and when milk prices go up 30%, 40% in a year, it's ridiculous. How are they going to sustain? Eric and I don't want our gains to hurt other people as well, right? So we want to have our gains but not have anyone else suffer, which isn't realistic if they just lower rates, sadly.

You know, I was watching CNBC last week, your favorite channel. McDonald's. So, basically, if you want a Big Mac meal, it's like $12 now, right? But if you go to Sweetgreen, which is like they're publicly traded now, right? Okay. Sweetgreen, they used to do salads. Now, they do bowls and then they have fish, they have steak, they have chicken. It actually comes out to only a little, like $2 to $3 more if you go into their store and buy it. That's why they're doing so well, right? And I think one of the reasons is one, people, Americans want to eat healthier, but they don't want to spend a lot more money. And then, Also, they've eliminated seed oils. So, they're following what all the health influencers are saying. And so, when people are like, I want to eat something healthy but not expensive and it's fast, people think about Sweetgreen. So, I think that was a nice way for them to kind of ride the wave of what other health influencers are talking about and just doing the right thing, right? Because again, they don't cook with seed oils, which is inflammatory according to health experts. They cook with olive oil, right? And it's like, oh, the healthy meats over here, organically sourced, right? So how you brand yourself goes a long way.

I think it does too. Now the real question is, do you actually go into Sweetgreen or do you Uber Eats it?

5% of the time I go into it. So yeah, I have a markup. I have a little bit of a markup, but each meal comes out to still like $25. You know what I mean? It's not as bad as, you know, Erewhon.

Dude, I was at the airport in Turkey this morning. I was with one of my buddies and we were flying to Madrid where I'm right now and I'm recording. And I was joking with him and I was like, all right, I'll find you a McDonald's for breakfast. He's like, uh, yeah, it was a double. And he's just like, McDonald's? He's like, I don't know. All right, I'll do it. I was like, I'm kidding, dude. I'm like, I don't eat McDonald's. He's like, I thought you get McDonald's. I'm like, every once in a while because, you know, because my kids want it. But I'm like, other than that, I don't get McDonald's. I don't eat french fries and chicken nuggets unless they're just laying around, you know.

Yeah.

It's just whether they've improved their menu or not, that I don't know. It just has a perception, the branding that it's unhealthy food and it's really hard to get away from that. My mind's just made up, especially when you start doing commercials like, now made with real chicken, for chicken nuggets.

Well, what was it made for before?

What was it made for before? Exactly. So, it's like that kind of stuff just makes me not trust that it's a healthy company even if they have salads on their menu, even their potatoes. The reason they don't have spots on their potatoes is because they make these farmers put pesticides and then these potatoes have to sit in these massive barns for I don't know how many days or weeks before people can go into them because it's so toxic. And it's just like, why would you want to give your kids McDonald's french fries after hearing that?

All right, everyone, quick message from the Agency Owners Association. So this is the peer group for agency owners that Neil and I both put together. This is for people that are doing 6 figures, 7 figures, 8 figures, even 9 figures as well. And we're all here to help you grow your agency faster. In this group, we share leads, we share learnings with each other. It's a community where people can ask questions, their most burning questions, personally, professionally. We'll share templates, reports, things like that. We're constantly adding more value to the group. I will tell you that the price is continuing to increase. The good news is that there's no long-term commitment. So you can just learn more by going to marketingschool.io/agency. Once again, that's marketingschool.io/agency to learn more, and we hope to see you inside. You want to talk about something controversial? It's not on the docket over here. Go for it. Okay, we'll decide if we want to cut this or not. So did you see that? So, man, so Miss Alabama, do you know what I'm talking about? I do not. Okay, so there's this, there's these pictures on Twitter. So it shows the Miss Poland contest, right?

And wait, Miss Alabama contest or Miss Poland contest? I'm confused.

I'm talking about, I'm talking about 2. So Miss Poland. Okay, Miss Alabama. Let's just say it was a plus-size woman that won it. Okay. And then I think Miss Tennessee, it was a trans person that won it, right? And so like on Twitter, there's like this uproar right now. But then and then someone showed a picture of Miss Poland where it's it's all like thin females that are really like attractive people, right? And so the branding here, we're gonna cut this out.

No, no, no, don't cut it out. Just keep going, keep going, keep going.

All right, I'm gonna keep going. But okay, it's like—

And by the way, Eric is not saying one is right or wrong from my understanding. I don't think you're making opinion on that, or maybe you are.

Well, okay. So I think when the brand starts to become skewed from what it was before to kind of what it is, what it was now, it starts to become— I think when these social issues start to creep into the original mission of a company, that's when we start to see distortion in the results, right? And so what we saw 30 years ago with Miss America or Miss whatever state is drastically different than what it is now, right? And I think it's because a lot of these social issues have chimed in. And I think that's why a lot of companies like Coinbase, for example, are saying, hey, we're just going to focus on the mission. Same thing with Google recently where they had the sit-in, right? People talking about free Palestine. And unfortunately, those people had to be fired. But I think The company needs to focus on its mission while whatever other views people have, they probably need to be kept outside because otherwise the product itself starts to become affected at the end of the day. And then you might start to lose viewership. You might actually lose business because you're not following your original mission.

So the way I look at it as it's a business and you got to do ideally what's best for the business. And as well follow the ethics and values that the people running the company as well as the board has, right? Because they, in theory, the board should be the major shareholders and people can take a vote if they want changes or whatnot. And I'll give you a great example of this. Victoria's Secret used to do a fashion show and it used to be like skinny runway models. You know, I don't know what Victoria's Secret focuses on, But if you think about the lingerie market, there's much more money in creating lingerie for the average person. The average person is not tall and skinny and has had 2 kids and only weighs 100 pounds, right? Like that's just unrealistic for 99.99% of the world to be. I don't really know what the real stats are, but there's no way someone can pop out kids and be that skinny. And I personally think it would be miserable to be that skinny. Like if I was those girls, I would want to go eat some hamburgers or chicken nuggets or french fries or pizza or whatever right after. Because it's like at the end of the day, yes, you ideally want to be healthy. It's better to be healthy than not healthy. But also being that skinny is unrealistic. And from a business aspect, I believe, I don't have the data on this, but I believe if you just look at the population, there's more money to be made selling lingerie for normal people and plus-size people than it is to sell lingerie for really, really skinny people.

Yep. Yeah. And so look, I don't think we're really trying to add our opinions in here. I think we've done a good job of avoiding adding any opinion here, but I think it's focused on the mission at the end of the day. And that's what it is. I want to take a second to tell you about my podcast co-host's agency. So NP Digital, so Neil Patel Digital. What they do is they do a whole host of marketing services and They are global, they're worldwide. They have SMB services as well. They have mid-market to enterprise services as well. They cover the entire gamut. So you can just go to mpdigital.com to learn more about it. And now back to the episode. Have you seen Nicole the Intern? Do you know who she is?

Nope.

Check this out. So the best marketing strategy ever. So this is her Instagram handle. So she has 526K followers and she only follows one person. That's the company she works at right now. And I think she's an intern at this company, right? So check out some of the videos that she's done. She did a collab over here with Gary Vee. Check this out. Oh, your four o'clock's here. Send him in. Reporting for duty. Let's smash some fucking cans. Nicole, your 4 o'clock. So I mean, that, that one alone got like 60,000 likes or so, um, and 2.6 million views on that collab. Look at how many views she's driving and she's trying to promote. She, she's coming up with all these ideas and she's shooting these. And look, 1.7 million views, 700K views, 523K views, right? 547K views. In a lot of these comments, people are like, oh my God, um, you're doing way too much for them. You should be paid way more money. And by the way, don't get me wrong. I, I think that's probably true. I think she's amazing. But I just think, man, if more people were like this as interns, I, for sure she's going to become some type of entrepreneur or like really highly paid exec. I think she's going to do fine in her career.

And by the way, there's a lot of people taking this concept now all over Instagram saying like, my boss wants me to do this, but I think I'll actually get to 500,000 followers faster by smashing a can or running over X, Y, and Z with a car, like whatever it may be. And you're seeing these accounts blow up. This works extremely well for consumer. Doesn't work as well for B to B. Speaking of videos go viral, did you see the TikTok girl that says like that created the song? I'm looking for what was it? I'm looking for a husband. Yeah, a finance dude. Trust fund six five. Oh yeah, yeah, yeah.

And then everyone reversed her.

Dude, that was entertaining. I listened to it probably like ten times.

So I think I saw I saw people making parodies of that, basically saying how like unrealistic it is. So people. Like, guys would make videos on like how their unrealistic expectations of women and then vice versa. So, um, I think I saw the aftermath of it, not the original video.

But hers was, of course, a joke. It was really obvious that she's like, if you look at her account, it's all humor and funny stuff. She's not actually saying like, this is what I want. I expect someone in finance with a trust fund.

And maybe other people responding like with humor too. Like, I don't know.

Well, some people are beating her up on it, which sucks. She's just joking around. But the whole purpose of it is she's trying to say like people just have unrealistic expectations of a spouse these days. They expect the world. They want someone who's super rich and handsome and fit and all this kind of stuff, or super pretty, super rich, super smart. Like they have everything, right? It's just like, how many people are there out there that are multimillionaires, both men and women, graduated from Harvard, Super successful, super fit.

You know, it's like one percent times one percent times one percent times one percent times one, and it's like point zero zero zero zero zero. Yeah, you'll never find it.

Can cook and clean, can make you know, fix up a car, can build a house. Like this is just unrealistic stuff that people are looking for these days.

Yeah. By the way, speaking of unrealistic, one mutual friend that we know, I'll tell you after we stop recording. She showed me her ring. It's like a $1.5 billion— billion— $1.5 million ring. And she just got a very expensive home close to the value of the home that you're buying, okay? And she also got the value of that in cash as well.

I don't know anyone else who lives by me.

Don't worry, I'll tell you after.

Do I actually know them?

Uh, yeah, yeah, yeah, yeah.

I just can't think.

But hey, sometimes you keep your expectations high and maybe you will find something like that.

Good for that person for getting the ring and the home, and congrats. Look, I have no hate if someone comes up however they come up. As long as they both— people in that relationship are happy, who are we to judge? It's their life.

Yep. All right everyone, so that's it for today. Speaking of which, the Agency Accelerator Or sorry, Agency Owners Association, I should say. Neil and I will both be doing a session this week. And so we do these group coaching calls every now and then. So that's happening. You can learn more about this group, marketingschool.io/agency. Please don't forget to rate, review, and subscribe. It helps this podcast grow, and we will catch you later. Bye.