What types of subscriptions do you have? Probably more than you think! On this week’s episode, Josh & Austin break down the idea of a company having a subscriptions service versus putting their products on a store’s shelves. You’ll hear them talk about why a business might decide to have a subscription and what that means for us as consumers. Listen now!
Main Talking Points
[1:26] – Background on Subscriptions
[5:37] – Why A Business Might Do Subscriptions
[14:23] – Dad Joke of the Week
[18:03] – What Do Subscriptions Mean to a Consumer?
[23:22] – What Subscriptions Do Josh & Austin Have?
[28:48] – Wrap It Up
Links & Resources
2020: The Year of Subscription Service Growth and Iteration
The Rise of Subscriptions – Survey
Invest With Us – The Invested Dads
Free Guide: 8 Timeless Principles of Investing
Social Media
Full Transcript
Intro:
Welcome to The Invested Dads Podcast, simplifying financial topics so that you can take action and make your financial situation better. Helping you to understand the current world of financial planning and investments, here are your hosts, Josh Robb and Austin Wilson.
Austin Wilson:
All right. Hey, hey, hey, welcome back to The Invested Dads Podcast, a podcast where we take you on a journey to better your financial future. Today, we, Josh, you and me, are going to talk about subscriptions.
Josh Robb:
Yes. How many people have subscribed to The Invested Dads Podcast?
Austin Wilson:
Ooh, that is a lot, but if you know someone who hasn’t, share this with them-
Josh Robb:
That’s right.
Austin Wilson:
… because they sure could.
Josh Robb:
Yeah. Then we’ll be talking about them as a subscriber.
Austin Wilson:
See, it’s just the circle of life. So, actually, Josh, that’s not quite what we’re talking about, but we are talking about those silly subscriptions, or not so silly, where you pay a fee for a recurring product or service.
Josh Robb:
All right. So we’re looking at not free subscribe, like subscribe to this podcast, but I’m subscribing to something, goods or services-
Austin Wilson:
Correct.
Josh Robb:
… that cost me money-
Austin Wilson:
Cost you money.
Josh Robb:
… and instead of having to each make the decision to go out and buy it again, they’re going to deliver it to me automatically based on me saying I want this reoccurring.
Austin Wilson:
Correct.
[1:26] – Background on Subscriptions
Josh Robb:
All right. So I did some research.
Austin Wilson:
I like your research.
Josh Robb:
And I found that subscription business has gone back hundreds of years.
Austin Wilson:
So before even-
Josh Robb:
1600s.
Austin Wilson:
… our parents were born.
Josh Robb:
That’s right. 1600s. And I’m like, “There’s no way.” There’s no way there was a Dollar Shave Club being delivered by horse.
Austin Wilson:
What are you subscribed to, the black plague-
Josh Robb:
The horseshoes. Horseshoes.
Austin Wilson:
… delivered to your house. Horseshoe subscription.
Josh Robb:
Custom horseshoes. But it turned out it was newspapers and magazines.
Austin Wilson:
Okay, okay.
Josh Robb:
Makes sense, when I thought back. Of course, right?
Austin Wilson:
I bet the photo quality-
Josh Robb:
That’s how everybody got their news.
Austin Wilson:
I bet the photo quality was exceptionally high.
Josh Robb:
It was hand-drawn. It was hand-drawn. But that was it, though, right? So if I wanted my news in the 1600s, most people got it through that type, through written newspapers and those types of things.
Austin Wilson:
I feel like newspapers today are still from the 1600s.
Josh Robb:
Yeah. There’s some dying areas there in the media. But the idea was, okay, I could go to the corner and have that kid, the newsie, sell me a newspaper for five cents or whatever.
Austin Wilson:
Child labor.
Josh Robb:
But if it’s easier for me, I want to have my coffee in the morning and drink my chai tea for me or whatever, I could have it delivered.
Austin Wilson:
True.
Josh Robb:
And then I’d have it ready to go. Again, it’s a convenience. I’m paying for this product or service, and there’s a convenience, is it’s going to come to me automatically.
Austin Wilson:
Yep. Yeah, we’ve actually seen kind of, what’s the word, an acceleration of subscription services, really, in the last five, 10 years. What comes to mind to me, as someone who looks at this kind of research-y stuff all the time, is the software as a service push. So, obviously, you can have goods as a service. You can have software as a service. Software as a service, fun acronym is SaaS.
Josh Robb:
SaaS.
Austin Wilson:
S-A-A-S. Very clique-y word in the finance industry, but-
Josh Robb:
So that company is being very sassy?
Austin Wilson:
They’re the sassy company.
Josh Robb:
Yeah.
Austin Wilson:
A lot of companies are moving from a business model where the revenue is made from a customer purchasing at one time to a business model where they’re receiving revenue over time. So one example that comes to mind is Microsoft. So I remember the days of Windows Millennium Edition, Windows 98, Windows XP, all of those operating systems. You had to buy the software, and you got a software key, and you bought that software once, and then you’re done. You’ve Stopped giving Microsoft your money. As long as you had that on your computer, you’re good to go.
Josh Robb:
You’re good.
Austin Wilson:
And all of the Word and stuff that came with it. Nowadays, that’s not the way it works. Nowadays, you have Office 365 or whatever, and you pay a subscription per month to have access to all of their software and stuff like that.
Josh Robb:
Yep. And you get the most recent all the time.
Austin Wilson:
Yes.
Josh Robb:
You’re not working off-
Austin Wilson:
And we’re going to talk in a little bit about the consumer benefits of that, but, yeah, that is kind of how that stuff works.
Josh Robb:
There was also a survey that the Harris Poll put on on behalf of Zuora, I think is how you pronounce it.
Austin Wilson:
Like The Mask of Zuora?
Josh Robb:
Yeah. We’ll link that in the show notes. But the idea was they surveyed a bunch of people internationally and found that 71% of adults across 12 different countries have a subscription service. Five years ago, or five years before that survey … I think that survey was two years ago in 2018. Five years ago, it was half. It was 53%. So we’ve seen an increase in people that do that.
Austin Wilson:
Substantial.
Josh Robb:
Yeah.
Austin Wilson:
I would imagine that it’s even more in 2020 because that’s a couple of years old.
Josh Robb:
Yep.
Austin Wilson:
And with it being everyone at home all the time and stuff like that.
Josh Robb:
Yep. And I’m wondering if some of those just missed. Because as I was looking through and thinking about my subscriptions, there’s things, if I was just asked on a phone call or a survey, I probably would have said no or at least left some out and not realized it, like Amazon Prime. For the people that use that for the free shipping, that’s a subscription service.
Austin Wilson:
Oh, yeah.
Josh Robb:
There’s a lot of people that use that. There’s those things that maybe if you said, “Well, I don’t really do those home meal boxes,” I may have not realized what a subscription service … Or even Word, like Microsoft, we subscribe to that. We have that in … Okay, that would count. So, yeah, you’re right.
[5:37] – Why A Business Might Do Subscriptions
Austin Wilson:
Yeah, and so I’m going to nerd out a little bit because that’s what I do. I’m a nerd. In an article from Multichannel Merchant, they found that subscription businesses on average are growing revenues five times faster than the overall S&P 500 revenue. So when this article came out, that was 18.2% revenue growth on average for subscription businesses versus 3.6 for the overall market. That’s huge.
Josh Robb:
Yes.
Austin Wilson:
And US retail sales in that sort of segment were up 18.2% average versus 3.7. So the software side of things is outpacing the overall market in any way you cut it, and this is an incredible opportunity to scale. So it’s no wonder that these are becoming very, very popular. And, actually, if you look at the stock market, you can see that companies who have that subscription service as their business model. So I’m thinking of things like Salesforce, thinking things like Microsoft, things like Adobe. That is kind of their niche, is the software as a service platform. Those subscription service platforms are being generously rewarded by investors, as investors are very excited about what that provides for them and they have really bid up those stock prices. They’re willing to pay a lot higher price for what they’re getting because of that stable growth.
Josh Robb:
Yep. Now, the downside to that is there’s very little entry cost. If I have a great idea and I want to charge to a subscription service or a membership … Some people call it a membership, however you want to look at it. Dollar Shave Club for men, what was that other … There’s Sasquatch, Mr. Sasquatch. There’s all those-
Austin Wilson:
Dr. Squatch.
Josh Robb:
Dr. Squatch, yes, there it is.
Austin Wilson:
We’re going to get there when we go through the examples.
Josh Robb:
But those are things that they have a product, but they chose the route of instead of stocking store shelves to go directly to the consumer-
Austin Wilson:
Really low barriers to entry.
Josh Robb:
Yes. So the downside is that you could have a great idea, but multiple people can copy you, and depending on marketing and their reach, they may beat you, even though you may be the first idea.
Austin Wilson:
And some other benefits from a company side of things, so from a marketing and advertising standpoint, they can market those little bite-sized monthly or whatever periodic expenses. Those are a lot easier to sell and market than it is, “Hey, you got to pay $500 up front or whatever for this.” An example that I was just reading about today, and today is the 25th-
Josh Robb:
25th.
Austin Wilson:
… of September. So I was just reading about this in this week’s Barron’s. Microsoft is coming out with their new gaming console, the Series X, later this year. That is going to be available as a subscription. So you don’t actually pay for the platform up front because the up-front-
Josh Robb:
Okay, so you get the box and you subscribe.
Austin Wilson:
Yeah, the up-front cost is the biggest barrier to people owning it.
Josh Robb:
Yes. Oh, yeah.
Austin Wilson:
And they’re also coming out with a refreshed Series S or whatever, so there’s two different tiers. For $24.99 a month for the smaller one or $34.99 a month for the new, big daddy one-
Josh Robb:
How many months? Five years?
Austin Wilson:
Two years.
Josh Robb:
Two years.
Austin Wilson:
So you are paying for that over two years, and you get software subscription and along with it, where you get games and stuff for free. So that’s a new example that I just found out about today.
Josh Robb:
Sidebar. Sidebar on that. How confusing is Xbox’s progression of consoles as opposed to PlayStation’s?
Austin Wilson:
Yeah, Xbox-
Josh Robb:
So you have PlayStation, PlayStation 2, PlayStation 3-
Austin Wilson:
Four, five.
Josh Robb:
… PlayStation 4. Guess what’s coming out next?
Austin Wilson:
Oh, five.
Josh Robb:
Yeah, look at that.
Austin Wilson:
No, Xbox went Xbox, then Xbox 360-
Josh Robb:
360. They went backwards to one.
Austin Wilson:
Then Xbox One?
Josh Robb:
Then X-Box something.
Austin Wilson:
Well, they’ve had the One, X, S-
Josh Robb:
Yeah, the slim, and then they-
Austin Wilson:
And then now they’re having this Series X.
Josh Robb:
So confusing. Yeah.
Austin Wilson:
So, yeah, I’m a little confused as well.
Josh Robb:
I would just count numbers.
Austin Wilson:
Okay, so here’s a poll. Are you a Xboxer or a PlayStationer?
Josh Robb:
So I currently own an Xbox 360, which is … I say currently. It’s the most recent one I own of one.
Austin Wilson:
Yeah, I had one of those when I was in high school.
Josh Robb:
I know. It’s how old it is. And so that’s the last game console that I’ve owned. Now, my one son has a Nintendo Switch, which I would say is a newer … I don’t know if I’d call it a console. You can’t play it on the TV, but it’s also mobile, so it’s one of those hybrid type of things. But, yeah, there hasn’t been any new … I’ve debated a PlayStation because it also is a Blu-ray player as well. But I do not. What about you?
Austin Wilson:
Hey, maybe these subscriptions will get you on board with the next generation.
Josh Robb:
Maybe.
Austin Wilson:
So I was a Nintendo guy growing up, and I still have the original Nintendo 64 that we had when we were kids.
Josh Robb:
Yep, with GoldenEye?
Austin Wilson:
We were not allowed to play GoldenEye.
Josh Robb:
Oh, man. Too violent.
Austin Wilson:
But I have played it since then, when I grew up, and it’s a-
Josh Robb:
And you’re allowed to make your own decisions.
Austin Wilson:
Yeah, it’s an awesome game.
Josh Robb:
It’s the best.
Austin Wilson:
But I would literally sell everything and just play Mario Kart 64. I also love Super Smash Brothers. So I was a Nintendo guy.
Josh Robb:
Super Smash Brothers.
Austin Wilson:
Then we got a GameCube. GameCubes are cool. Super Smash Brothers was the main thing on GameCube. but-
Josh Robb:
They have that now for the Switch.
Austin Wilson:
Yeah.
Josh Robb:
It is a lot of fun.
Austin Wilson:
I love it.
Josh Robb:
It feels like-
Austin Wilson:
The original?
Josh Robb:
… the old school. Yep.
Austin Wilson:
So then, in high school, I got a free Xbox 360 because it died and I was able to fix it.
Josh Robb:
Nice.
Austin Wilson:
Which was weird. And then I kept that through college, sold it, didn’t have video games for a while. Then, last year, my wife got me a Xbox One-
Josh Robb:
Nice.
Austin Wilson:
… which is nice. And I have a steering wheel for it, and I can play racing games and stuff like that.
Josh Robb:
Awesome.
Austin Wilson:
It’s pretty cool. So, anyway, I’m an Xbox guy now. So Series X, we’ll probably do a actual video game episode.
Josh Robb:
Yeah, to get to talk through.
Austin Wilson:
That’s not really what the point of today is. It’s software and subscriptions in general, but-
Josh Robb:
But that is-
Austin Wilson:
… that is part of it.
Josh Robb:
Yes.
Austin Wilson:
It’s very popular.
Josh Robb:
You’re seeing that being moved in all different instances because you used to subscribe … Or you used to buy the game.
Austin Wilson:
Correct.
Josh Robb:
Now you can subscribe and get a Series.
Austin Wilson:
Access to all kinds of games.
Josh Robb:
It’s interesting.
Austin Wilson:
Another couple benefits for these businesses are the aspect of recurring revenue. So obviously even if you’re not paying that $500 up-front for the Xbox, you’re spreading that out over time. But that over-time revenue, you know it’s coming in, it’s steady, and it’s great. So from a business standpoint, that steady cashflow is a very, very good thing to have. They also can then better plan and plan their supply chains for things that are physical subscriptions. They know how many people are going to be expecting things and when they’re going to be expecting them, so they can have better, tighter inventory and stuff like that.
Josh Robb:
And along with that, when you think about their marketing revenue, they’re trying to keep their current subscribers. So a lot of businesses, once they make that transaction, they’re out looking for their next customer, right, because they need those new purchases. But if I have a subscription, I’m trying my best to keep you here. And so they’re spending their marketing budgets a little different, is I want to make sure I’m in front of the people subscribing to say, “Hey, look at all the value you got using me. Don’t let your subscription lapse.” So they’re kind of switching how they’re marketing, too, is they do need new subscribers, but keeping the subscribers is even more important.
Austin Wilson:
That’s why specifically for things like software … That’s why you don’t just get the same access to the same software forever. You get the constant updates and all that, which is really-
Josh Robb:
Yes. Yep. The value add.
Austin Wilson:
Yeah, it’s really great from a consumer standpoint, but from a business standpoint, that’s why they’re giving you that new update, is so that you stay with them. Speaking of software, another reason that this is such a lucrative business model is the margin enhancement. So think about software. Josh, you develop a fancy software to automatically use artificial intelligence to detect doughnut scores.
Josh Robb:
Yes.
Austin Wilson:
You can look at a donut and tell you what the score is.
Josh Robb:
How great it’s going to be.
Austin Wilson:
So Josh develops this software. It’s a paid app on the app store. So, Josh, you put your app on the app store, and obviously you give your 30% cut to Apple.
Josh Robb:
Totally. Unfortunately.
Austin Wilson:
Touchy subject. That’s a touchy subject. But then you’ve already made it. It’s done, and maybe there’s a little bit of background work, but you’ve made it. You put all the hours and time and money into developing it. Now you’re selling it. And the more you sell, you sell more and make more than the ongoing investment you’re going to have to make to maintain it. So for any business who makes software, sure, you spend a lot of time and money developing the software.
Josh Robb:
Up front.
Austin Wilson:
But the maintenance of whatever of the software going forward is much less than the scalability once that software is out and growing. So it’s a very, very lucrative business model where margins expand greatly. And that’s another reason that people are very willing to spend very, very high multiples on these software companies in the stock market.
[14:23] – Dad Joke of the Week
Josh Robb:
Yeah. Awesome. Well, that was great. That was a good intro. I think we got a good idea of why businesses would choose this route instead of hoping customers show up at their door. Austin, let’s take a break. Dad joke.
Austin Wilson:
Dad joke of the week?
Josh Robb:
You got one for me?
Austin Wilson:
Oh, I got one. Mathematician.
Josh Robb:
I’m ready.
Austin Wilson:
This is a statistical one.
Josh Robb:
Oh, boy.
Austin Wilson:
Why did the mathematician get fat?
Josh Robb:
Why did the mathematician get fat? I don’t know, Austin.
Austin Wilson:
Because he ate too much pie.
Josh Robb:
Too much pie. 3.14 slices.
Austin Wilson:
How many digits do you know of that?
Josh Robb:
Oh, geez.
Austin Wilson:
3.14 is about as far I go.
Josh Robb:
That’s as far as I need to go around.
Austin Wilson:
There’s hundreds.
Josh Robb:
It’s endless, I believe.
Austin Wilson:
Oh my goodness. I can’t do that.
Josh Robb:
Yeah. 3.141579. I don’t know.
Austin Wilson:
If someone … You’re just making up numbers, obviously.
Josh Robb:
I’m just throwing numbers out right now.
Austin Wilson:
So here’s a sidebar. Do you like pie or cake better?
Josh Robb:
Ooh, that’s a great question. It depends on both of those.
Austin Wilson:
Yeah?
Josh Robb:
Yeah. So my wife is a wedding photographer. I help her out. So most Saturdays we are at a wedding and we are eating some sort of dessert because that’s the tradition.
Austin Wilson:
Timeout. If you do not remember, that’s actually how Josh and I met.
Josh Robb:
Yes.
Austin Wilson:
They photographied-
Josh Robb:
Photographied?
Austin Wilson:
… our wedding all those years ago.
Josh Robb:
We took pictures at your wedding.
Austin Wilson:
So, anyway, back to Josh.
Josh Robb:
Yes. So I will say, because of that, I eat cake more often than most people, which is a positive in my life. But I get excited when the wedding has pie because that’s something I don’t always get. So I would say I get more excited about pie because it’s less frequent of a thing in my life. I like fruit pies, so an apple pie, cherry pie, strawberry rhubarb pie. Now, I’m lactose intolerant, so I don’t do ice cream, but if I could have some dairy-free ice cream, vanilla ice cream, along with the pie, then you’re all set. I mean, that’s it. That’s where it’s at. What about you?
Austin Wilson:
I’m the same.
Josh Robb:
You’re pie?
Austin Wilson:
Pie guy.
Josh Robb:
Pie guy?
Austin Wilson:
I eat and I prefer fruit pies. I don’t hate cake, and I have a thought about cake. But pies, specifically, strawberry rhubarb is my second favorite.
Josh Robb:
Oh, it’s so good.
Austin Wilson:
Peach-
Josh Robb:
Peach pie is good.
Austin Wilson:
… especially when in season is my first favorite pie.
Josh Robb:
That is good.
Austin Wilson:
So I love pie, a little scoop of vanilla ice cream is my jam. But cake. So you’re a lot of weddings. They do the white cake cutting and all that stuff. There’s the tradition to take the top piece of the cake or whatever, put it in the freezer-
Josh Robb:
Save it for a year.
Austin Wilson:
… and then eat that-
Josh Robb:
And then choke on it, yeah.
Austin Wilson:
… on your first anniversary.
Josh Robb:
It’s horrible.
Austin Wilson:
We tried that, and I don’t think we actually ate it.
Josh Robb:
Oh, it’s so bad.
Austin Wilson:
Because it sounds so bad.
Josh Robb:
Yeah, how can this last a year in the freezer?
Austin Wilson:
That’s a year. It’s going to be freezer-burnt, for sure.
Josh Robb:
It’s only wrapped in saran wrap, it’s horrible.
Austin Wilson:
So, sidebar, that’s pretty gross.
Josh Robb:
15 years ago, I remember we did that and-
Austin Wilson:
You just threw it away when you moved?
Josh Robb:
No, we tried it, and it was not good. I mean, the frosting was fine because it was just cold frosting. But cake’s not designed to last that long. I don’t know who started that tradition.
Austin Wilson:
Well, they haven’t had freezers that good for that long. So it has to be relatively new.
Josh Robb:
Or they did it before, which is really gross cake, moldy and rock hard.
Austin Wilson:
That’s just some really frugal people, like, “I’m going to save this cake for next year.” Okay.
Josh Robb:
I could see going and ordering the same cake and eating it as a tradition. That would be a better tradition. Let’s re-enact, one-year anniversary, cutting of the-
Austin Wilson:
With a new cake?
Josh Robb:
Yeah, you actually get a small little tier of wedding cake.
Austin Wilson:
Subscription service.
Josh Robb:
Oh, man. You could send a cake.
Austin Wilson:
Every year on your anniversary-
Josh Robb:
Get a cake sent.
Austin Wilson:
… you could get a small little cake sent. Josh, we could-
Josh Robb:
Trademark.
Austin Wilson:
We could be onto something there.
Josh Robb:
We’re on it.
Austin Wilson:
Also, the saying, “You can have your cake and eat it, too,” never really understood what that means.
Josh Robb:
Well, you either have your cake or if you’ve eaten it, you no longer have your cake.
Austin Wilson:
But do you?
Josh Robb:
Yeah, it’s gone.
Austin Wilson:
It’s there.
Josh Robb:
Well, it depends on what you eat.
[18:03] – What Do Subscriptions Mean to a Consumer?
Austin Wilson:
All right. We should get back to business. What does software … Not software. It’s not just software.
Josh Robb:
Subscription. Yeah, subscription.
Austin Wilson:
But what does subscriptions in general mean for you as the consumer listening to this?
Josh Robb:
So the big one is obviously automation, right? I’m asking them to do something for me periodically, and I’m going to pay them or set up a reoccurring payment. So Dollar Shave Club. We’re both guys. We both tend to grow facial hair. We need to shave it periodically. And so the idea there is I’m going to tell you, “Hey, once a month I need some new razors, send me some razors.” And they said, “Oh, we’ll do that for you. Here’s how much we’ll charge. And we’re going to keep doing it until you tell us to stop.” For me, that’s great if I’m going to need something over and over. Amazon Prime has their-
Austin Wilson:
Subscribe and Save.
Josh Robb:
… Subscribe and Save, and so they actually give you a discount if you reoccur because for them it’s reoccurring revenue and for you toilet paper, which-
Austin Wilson:
Always need it.
Josh Robb:
… was probably out of stock there for a while. But, in general, the idea is something that’s a staple in my life that I’m always going to need to replenish, paper towels, all those things, I could have it delivered to my door so I don’t have to make a trip out.
Austin Wilson:
Right. That’s also a danger, is that automation, and we’ll talk about that in a second. But another one is that you really have better control over what you’re paying for when you subscribe. So you really know exactly what you’re getting, and you only subscribe to things that you want, and you’re not getting any of the fluff you don’t need.
Josh Robb:
Yep. And along that, too, another subscription service is TV channels, right? So there’s cable TV, you can subscribe to that, or there’s the digital streaming services. I have better control now than I had 15 years ago. I had to choose whatever package was there, and the channels showed up whatever they chose to be on there. Now, I can pick and choose, “Okay, I want more sports, I’ll go this package, I’ll choose this subscriber.” Now, it’s becoming individual channels have their own subscription, so if I want a certain channel’s stuff, I could just subscribe to them. So you do have better control over what you’re getting.
Austin Wilson:
It’s just really easy to use, which is great. And like the Amazon thing, yeah, you just click Subscribe and Save and those things automatically come, or you set it up once and you don’t have to think about it. The shaving thing is a great example, especially for things that you run out of. It’s great to have one automatically come to your door without you even having to think, “Oh, I’m about to run out.” So that’s why they’re really, really good. Another one is freshness. So if you subscribe for consumable things, you can subscribe for those things and you’re always getting fresh stuff and it doesn’t expire, things like that.
Josh Robb:
And depending on where you live, if you’re in a big city, transporting and getting groceries could be an inconvenience to lug that all the way up the … You know, all the ins and outs of finding a parking spot, if you even drive a car, all that stuff. Well, if they’ll just deliver it to me, all the better, and I can subscribe to having food delivered to me or fresh produce, all that stuff. Or prescriptions, you can subscribe to those. And that, again, is an expiring but needed piece of, what do we call it, consumables that man, if I have somebody say, “Okay, you have a 30-day supply, this is coming to the 29th day, so you’re ready to go,” and it’s consistent and showing up, it does make it a lot easier for your life.
Austin Wilson:
Another one that we had talked about a little bit is software. When you subscribe and you pay for that, you are constantly getting the newest, the latest, the best, the safest from a security standpoint, all of these updates. You get a phone update or an iPad update or whatever. Half of the things that’s new is fixing bugs and security-
Josh Robb:
Yep, or holes.
Austin Wilson:
… bugs and holes. I mean, Apple products don’t really have those things so.
Josh Robb:
I don’t know, I just had an update. Something was getting fixed.
Austin Wilson:
But, anyway, it’s just great to have that software. But back to the dangers of those automatic renewals, it is somewhat frustrating sometimes if you sign up for a free trial and then you get billed because you forget-
Josh Robb:
Forgot to cancel.
Austin Wilson:
… on 14 days to cancel it or whatever.
Josh Robb:
By the way, MasterCard, I read, now requires free trials to send an email or text before they start or else MasterCard will block them. That’s pretty interesting, huh?
Austin Wilson:
Really? So if you have a subscription, you’d better put it on your MasterCard?
Josh Robb:
Yes. So if you sign up for a free trial and you’re using a MasterCard, apparently, based on what I read, they’re requiring those places, because of this issue, to … Now, that won’t stop them from charging. As long as they send you a reminder and alert, then they’ll let it go through. But if they’re just secretly letting it push through if forgotten, they’ll step in on your behalf, which is nice. But that shows the problem. If MasterCard had to do something for you, yeah, there must have been enough pushback from that.
Austin Wilson:
Yeah. Because I’m sure a lot of people are looking at their statement at the end of month and they’re like, “Huh.”
Josh Robb:
“Where’d this come from?”
Austin Wilson:
“I wonder what this $14 whatever is.” So I guess that’s the tip, is to be careful because it’s really easy to have duplicates or too many of these little … They seem small, these subscription things, and because they’re a low cost on a dollar basis per month, they really add up. So just keep an eye on these.
Josh Robb:
Yeah, and frequency. So let’s say you sign up and they’ll say, “Hey, you get a year’s worth.” Well, I better remember 12 months from now to reevaluate if I still want that because, up till then, I haven’t seen anything pop up and it may be back of my mind that I even did that 12 months ago. With life going on, sometimes you forget that stuff.
Austin Wilson:
Set a reminder on your phone.
Josh Robb:
So set a reminder, use your calendar, something.
Austin Wilson:
No one uses a calendar.
Josh Robb:
What? Yeah.
Austin Wilson:
On your phone maybe.
Josh Robb:
Yeah, a calendar on your phone.
Austin Wilson:
Okay, that’s better. That’s better.
Josh Robb:
You put a little thing on there to say, “Yeah, reminder…”
[23:22] – What Subscriptions Do Josh & Austin Have?
Austin Wilson:
So bring it home, Josh. What subscriptions do you have? Talk about-
Josh Robb:
I’ll try to name some of them.
Austin Wilson:
… some of the entertainment things.
Josh Robb:
Yeah.
Austin Wilson:
Now, we did have a complete episode of streaming.
Josh Robb:
Streaming, yes.
Austin Wilson:
So it’s called Streaming Wars. If you’re interested, look at that, where we talked about video streaming, streaming video on demand, SVOD. So we talked about some of those. But kind of rattle those off, but then some of the other less common things.
Josh Robb:
Yep. Right now, we have Hulu as our streaming service and then Disney+ as well.
Austin Wilson:
So do you have ESPN+, too? Do you got the bundle?
Josh Robb:
No. In Hulu, you have ESPN, so I didn’t have to add ESPN+. I don’t need it, so I didn’t go for the bundle, but you’re right. And then what else do I have? Well, my wife with her photography, Adobe, which has a recurring subscription, and then … Let’s see. Netflix and then the Amazon Prime are our primary ones that I could think of from a subscription service.
Austin Wilson:
Shaving?
Josh Robb:
I do not do any of those. I probably-
Austin Wilson:
You don’t shave.
Josh Robb:
I don’t shave. I just buy razors.
Austin Wilson:
Butter knife?
Josh Robb:
Yeah, I haven’t gone that route yet, but that’s always one that keeps popping up as potential use. We’ve tried in the past those food deliveries. Again, they’d offer a deal of-
Austin Wilson:
Yeah, like Hello Fresh or whatever.
Josh Robb:
Blue Apron or Hello Fresh, we’ve probably tried a couple of them, just more out of curiosity than anything, and they’ll give you a discount deal to try it for a couple months or whatever. They’re great, but with four kids-
Austin Wilson:
It’s not sustainable.
Josh Robb:
… it’s hard to get the amount of food right. And then when you have kids that they don’t like to try new things, they like to keep what works. So I haven’t met a food delivery service that has peanut butter and jelly consistently. So that’s the other thing, is sometimes they’ll send you something that’s really good but your kids don’t eat it, so you just look at what you paid and they’re not going to eat it. So we’ve not continued those.
Austin Wilson:
The mom and dad rice pilaf meal with then the chicken nuggets and mac and cheese for the kids.
Josh Robb:
Yep, that’s the way to go.
Austin Wilson:
That could be another-
Josh Robb:
Storage units. So I don’t have one, but when we moved, we temporary got one while we were selling our house to move some stuff because we lived in Indiana then moved back to Ohio. So there was a time period where stuff was in transition and we used the storage unit. I didn’t realize it, but when I was looking through it, that’s a subscription service. I’m paying reoccurring to keep my stuff there. And so for about two months, we had that for a while. So that was one. Another one that we don’t currently have is a gym membership. So we used to have a membership to a gym, which is, again, a recurring service for the ability to go work out at a location.
Austin Wilson:
Exactly.
Josh Robb:
What about you, Austin? What do you use?
Austin Wilson:
Well, the entertainment side of things, we do have Netflix, although I think we’re canceling it. The Cuties thing really was the push, but we were already not using it very much. That was annoying and weird, not to get into that. So we have that. We have the combo of Hulu, Disney+, and ESPN+, which is really great. We love Hulu. Hulu’s just amazing. And Disney+, we’re going through the Marvel series with my brother-in-law and my sister once a week. So it’s just great to be able to work through those. We have a free year or whatever because of a new device of Apple TV+.
Josh Robb:
Oh, I do have that, and I set a reminder to cancel-
Austin Wilson:
Did you?
Josh Robb:
… or at least reevaluate it in January.
Austin Wilson:
I haven’t watched anything on it yet. But it looks good.
Josh Robb:
I don’t know how it works.
Austin Wilson:
And then we have Apple Music, so we get our music subscription for that and a family membership on that. Apple’s launching Apple One or whatever, where they’re bundling Apple Music and Apple TV+, and iCloud, and all that. So we’re probably going to end up with that. We have Amazon Prime, so we love that. I have two hygiene subscriptions. I like to not stink.
Josh Robb:
Yes, smell good, you do.
Austin Wilson:
Thank you. So Dr. Squatch, this is not in any way, shape, or form sponsored by them, but hey, if you want to sponsor us, Dr. Squatch, hook us up. I love your soap. It’s a natural soap and shampoo thing, but I really like it. It’s really manly-smelling. So I get a bar of soap a month.
Josh Robb:
Oh, nice.
Austin Wilson:
And then every three months, I get a shampoo/conditioner thing.
Josh Robb:
So a bar of soap?
Austin Wilson:
Yeah.
Josh Robb:
Not a liquid soap guy.
Austin Wilson:
No.
Josh Robb:
You like the bar soap.
Austin Wilson:
I’m old school. I’m old school. And then I get … Harry’s is a shaving brand. I get a Harry’s razor subscription. Really, I only get it whenever I need it. But they usually send-
Austin Wilson:
So you can pause and start it?
Josh Robb:
Yeah.
Austin Wilson:
Okay.
Josh Robb:
They usually send eight razors at a time, and that lasts a long time because I usually have some form of facial hair. So one razor lasts a while. I’m trying to think if there’s any other subscriptions we have. We’re evaluating Instacart. We’ve tried it a couple of times for free and kind of dig it. It’s free grocery delivery. It’s not free once you pay for it. But that seems like a pretty cool subscription. And I’m sure there’s other ones, but those are kind of the main ones.
Austin Wilson:
Those are the big ones. Is there a Chick-fil-A subscription service? If I just had Chick-fil-A delivered to my house whenever I needed to.
Austin Wilson:
Nuggets. Five nuggets per day.
Josh Robb:
That’d be nice.
Austin Wilson:
I would get the Chick-fil-A breakfast burrito subscription if they had that. Have you had their breakfast burrito?
Josh Robb:
I’ve had their sandwich, not the burrito, like the one with the biscuits.
Austin Wilson:
You got the one with the breakfast burrito. It’s a scramble, burrito, whatever. Get it with sausage. It’s so good. And then it has potatoes in it, and it comes with those little potatoes.
Josh Robb:
We should not do this podcast while we’re hungry.
Austin Wilson:
I know.
Josh Robb:
It’s bad.
[28:48] – Wrap It Up
Austin Wilson:
So subscriptions, Josh. Wrap us up.
Josh Robb:
Yeah. So, in general, the idea is for a company, it’s a way of reoccurring revenue. It helps smooth out your income basis. So instead of hoping that customers show up, I’m committing these customers to a certain time period. So that’s great for the business. For the subscriber, for the customer, it’s nice and convenient for me. It makes it so that I don’t have to remember to go get something. They’re just going to show it to me or provide the most up-to-date thing for me. So both parties are getting value from this. There’s a lot there.
The downside is, like we talked about, because it’s reoccurring, your priorities or your tastes may change where you may not use or need it and it’s up to you to cancel it. The company is not going to say, “Hey, we realize you’re not using this as much. Do you want to stop this?” They’re not going to do that.
Austin Wilson:
They’ll bill you till you stop.
Josh Robb:
Yep. Now, there are apps and products out there that are designed … So it shows you how this industry is evolving. Now, there’s apps to tell you how to check all your subscriptions and which ones you need to cancel.
Austin Wilson:
I bet there’s a subscription to use that.
Josh Robb:
A subscription to subscribe to your unsubscribing. So that is out there. But, in general, the whole advancement of technology has allowed people to use these reoccurring things. Again, it’s going back all the way to 1600s. It’s not something new. but it’s evolved over time as new technology has been there to more things in our sphere of influence are being impacted by subscriptions.
Austin Wilson:
Yeah. So that’s a lot. That’s kind of an interesting theme that we’re seeing, and we thought we’d talk about that with an episode this week. But we are just happy that you guys are listening and hope that you learned something. As always, check out our free gift to you. It’s a brief list of eight principles of timeless investing. It’s free on our website. These are overarching investment themes. They’re meant to keep you on-track to meet your long-term goals. Josh, how can people help us grow this podcast?
Josh Robb:
Well, they could start a subscription with our podcast.
Austin Wilson:
That’s right.
Josh Robb:
So please subscribe. It’s free, though, so it doesn’t count as what we talked about.
Austin Wilson:
That’s free.
Josh Robb:
You could also leave a review on Apple Podcasts. It’s great for us to better rank so more people can find us. Ideas, we’re big on that. So, please, if you have an idea, send us an email at hello@theinvesteddads.com, and we’d love to talk about that topic.
Austin Wilson:
Yeah. And if you really enjoyed this, share this episode with friends and family who may enjoy it as well.
Josh Robb:
All right, we’ll talk to you next week.
Austin Wilson:
Next Thursday. Thanks.
Josh Robb:
All right. Bye.
Outro:
Thank you for listening to The Invested Dads Podcast. This episode has ended, but your journey towards a better financial future, doesn’t have to. Head over to theinvesteddads.com to access all the links and resources mentioned in today’s show. If you enjoyed this episode and we had a positive impact on your life, leave us a review, click subscribe, and don’t miss the next episode.
Josh Robb and Austin Wilson work for Hixon Zuercher Capital Management. All opinions expressed by Josh, Austin, or any podcast guests are solely their own opinions and do not reflect the opinions of Hixon Zuercher Capital Management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Hixon Zuercher Capital Management may maintain positions in the securities discussed in this podcast. There is no guarantee that the statements, opinions, or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses, which would reduce returns. Securities investing involves risk, including the potential for loss of principal. There is no assurance that any investment plan or strategy will be successful.
