Uber's First Public Quarter, Uber's First Public Billion-Dollar Loss

In this week's Motley Fool Money, host Chris Hill and Motley Fool analysts Jason Moser and Ron Gross hit on the market's biggest news.

The market isn't giving Uber (NYSE: UBER) much "new tech company" leeway when it comes to bleeding cash like it's a sick noble in medieval England. Costco (NASDAQ: COST) fell despite a good report. Gap (NYSE: GPS) fell on a dreadful report. Also: Okta (NASDAQ: OKTA), Williams-Sonoma (NYSE: WSM), Ulta Beauty (NASDAQ: ULTA), Zynga (NASDAQ: ZNGA), and some stocks on our radar this week.

Plus, Chris interviews comedian Greg Fitzsimmons about the comedy industry. The comedy industry of the early '00s looked a bit like the dot-com bubble, and then it burst. TV changed how comedians approached their work, and the internet turned that up to 11. Greg also talks about where he got started, how he got into show writing, the most fun and most lucrative types of gigs, and more.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. A full transcript follows the video.

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This video was recorded on May 31, 2019.

Chris Hill: It's the Motley Fool Money radio show! I'm Chris Hill. Joining me in studio this week, senior analysts Jason Moser and Ron Gross. Good to see you as always, gentlemen! We've got the latest headlines from Wall Street. We will dig into the business of comedy with our guest, Greg Fitzsimmons. And as always, we'll give you an inside look at the stocks on our radar.

But we begin with Uber's first report as a public company, and it was a doozy. By that, I mean Uber lost $1 billion in just 90 days. Jason, we've seen unprofitable start-ups lose money, and investors will still buy the shares. You look at the stock, Uber's basically flat on Friday. That tells me, among other things, that they're not really doing anything just yet to get Wall Street excited.

Jason Moser: I mean, I think that's a fair statement. I think the story for investors, when it comes to Uber, it's figuring out all of the different ways they can leverage this network to make money. Today, that's the rideshare business. That's new mobility, like scooters, the Uber Eats business, Uber Freight. These are all pieces to that overall puzzle.

For me, I mean, the 20% top-line growth, maybe my expectations were just a little bit higher, that seemed like nothing to write home about. But by the same token, gross bookings were up 34% to $14.6 billion. Trips grew 36%. That's good as well. I think if you look at the call, certainly the theme was Uber Eats. I think that's where they're really seeing the biggest opportunity, at least in the near term. Gross bookings for that side of the business were $3.1 billion, it was up 117% excluding currency. They have 220,000 restaurants on board with that network. The thing is, with food delivery, the economics of it can be tricky. There are expenses in maintaining that network. It's not always a no-brainer for the restaurants either. We're seeing Grubhub dealing with some of those challenges as more of the pure-play there.

I mean, Uber is an impressive businesses, it's an impressive network, I think, with a lot of potential. They're going to have to figure out as they go along a way to become profitable with these four main drivers. I know a lot of people are looking toward those self-driving cars thinking that's really the pot of gold at the end of the rainbow. You just have to recognize that's still at least a decade away. And I feel like people who were thinking that we'll be surrounded by these self-driving cars and the next few years, it's just a naive point of view in my opinion, I could be wrong, of course.

Ron Gross: I saw some interesting analyst comments that price competition with Lyft might be dying down, which would obviously be good for them. It would increase take rates, which is the amount of money that Uber can keep after paying drivers. So, profitability must be right around the corner, if the corner's on the moon. When you don't have profits, you talk about the path to profitability. That's the big buzzword. Path to profitability for me is just a euphemism for "we don't make any money." I don't know how to value the stock if they don't make money.

Hill: To that point, you go back to the top-line revenue. Jason, I think if Uber had come out in this quarter and grown top line revenue 40%, 50%, something like that, I think that gets Wall Street a little bit more accepted. As you said, 20%, that's fine, but it's only fine.

Moser: It is. And if you compare that 20% to the growth that we were talking about with gross bookings and rides, I think that implies that perhaps there is still some price competition going on out there. I don't know that Uber is ever going to be a business that can really realize much in the way of pricing power. I don't know that that's really a point, though. It's ultimately about the network effect and figuring out the different ways they can exploit this network on a global scale. I think they're doing the right things. To Ron's point, the path to profitability is very unclear. I think it's going to take a long time to get there. Thankfully for investors today, the stock isn't really absurdly priced if you look at it on a price to sales metric. But you also have to take that with a grain of salt and understand that profitability is going to be quite some time away.

Gross: Last comment on competition. You see Lyft talking about, we're going to start to compete on brand, not on price. Good luck there! I have a feeling that won't stick. We're going to continue to see promotions for a long time to come.

Moser: I think you're right. I started asking myself this question in regard to Uber and Lyft. I don't know that there's necessarily as a brand advantage to either one. I started asking myself about brand disloyalty. Go back to when Uber was having all of those culture issues. That sent a lot of people fleeing and using Lyft as an alternative there. Here at Fool HQ, we use Lyft as our provider versus Uber. I wonder in some cases, when a company really screws up, maybe there's not the brand loyalty, but there could be brand disloyalty that comes into play that could affect either one of these businesses.

Hill: Third-quarter profits for Costco came in higher than expected, but shares falling a bit on Friday. Same-store sales in the U.S. were up 7% Ron. That's strong!

Gross: Very impressive! I think what's going on with the stock is disappointment over membership fee growth, comps were just a little bit light, especially international, U.S. was strong, and the uncertainty surrounding tariffs and what that could mean. They did make some comments there about having to maybe resource some of their items from different areas around the globe. I think that all has people a little bit shaky.

But it was a solid quarter, especially when you account for the fact that they sold a $400,000 ring. I didn't even know they sold $400,000 rings, but look it up. They sold one during the quarter. Overall revenue up 7.4%. 7% gain in comps, as you said, in the U.S. But in Canada, only 1%, and 1% overall internationally, mostly hurt by the strong dollar. Won't penalize them too much for that. E-commerce up 22%, always important for folks like Costco.

Hill: In general, May has been a rough month for retail. But I was struck this week by the performance of the discount retailers. We saw results from Dollar Tree, Big Lots, both those stocks up after their latest reports. Dollar General hitting a new all-time high. You go back over the last five years, both Dollar General and Dollar Tree have beaten the market. They're really executing well at those companies.

Gross: Very strong performance out of all those types of dollar stores, those discounters. Dollar Tree was the one that was struggling because they have Family Dollar as well, which was always the weak link there. They had acquired them back in the day. And then Starboard, the activist investor, came on board and said, "You have to sell them, you have to get your house in order." They said, "We're not going to sell them, but we're going to make a lot of moves. We're going to close underperforming stores, we're going to remodel." That firmed them up nicely. Those stores continue to put up comp sales that are just impressive. They're executing well.

Hill: Ulta Beauty shares falling a bit on Friday despite first quarter profits coming in higher than expected. Jason, they also raised guidance for the full fiscal year. Are we not impressed?

Moser: I'm very impressed! I mean, I remain impressed with this business. It's been one of the great investing stories of the past several years. I think that really is primarily due to CEO Mary Dillon, what she has been able to do in executing her vision since 2013. Shares have better than tripled under her watch. I don't think there's any reason why we shouldn't expect that to continue. We look at the comps growth, top line growth, all very strong thanks to a healthy mix of traffic and increasing average tickets. The plan is to open around 80 new stores this year. They are steering away from quarterly guidance, which I'm refreshed to see. I think they're focused a little bit more, we're just going to tell you what our strategy is for the year, we're not going to sit there and worry about the quarter to quarter, understanding that retail is a bit more difficult to predict on that granular a level, so to speak. They've really done a good job executing, I think, on the loyalty customer. They have now 33 million loyalty members. 90% of their store count is essentially off-mall, so they don't have to worry about mall traffic. And Chris, what if I told you -- Ron, too -- what if I told you Ulta is a tech company? Would you believe me?

Gross: No, Jason, I would not.

Hill: I mean, on the surface, they appear not to be.

Gross: This is a loaded question.

Moser: I won't say it's a tech company. But I will say they've made some impressive investments at least in AI and augmented reality, believe it or not. An acquisition at the end of last year, Glam, gives them the capability now within their app for customers to try on their products before ever even having to go to the store to potentially buy them. Ultimately, what I think that does, it translates to a better customer experience overall. They carry a lot of private label stuff, a lot of brand label stuff. It seems like they have products for just about everybody out there. Just a very, very impressive performing business.

Hill: First-quarter results for Gap were a horror show. Same-store sales falling at both Gap and Banana Republic. And, Ron, Old Navy's comps were down as well. Old Navy is usually the silver lining of this business.

Gross: What if I told you Gap was a tech company?

Moser: [laughs] Tell me more!

Gross: No, you're right. This is a mess. Net sales down 2% overall. Old Navy, which is usually the bright spot, down 1%. It actually dampens the optimism for the spin-off that I still think will occur. Not a good result. Gap down 10% on comps, Banana Republic down 3%. Margins narrowed. Adjusted earnings down 43%. The stock is up 30% year to date. These folks are not getting it done.

Hill: The CEO talked about how this was one of the coldest, wettest quarters in memory.

Gross: [laughs] That's the exact quote!

Hill: I get that, but doesn't that also inadvertently highlight the fact that they have no e-commerce strategy to speak of? If you're completely dependent on getting people out of their homes, you're dead.

Gross: Yeah, for sure. It's an in-store experience. I've actually recently purchased something from The Gap, both in-store and online. It was the first time in a long time. The store is always 50% off. They've got Gap Dollars that they're constantly giving back for promotional reasons. It's a business that continues to struggle.

Hill: So, the stock at a seven-year low does not interest a value guy like you?

Gross: I'm going to say at 8.5 times their current-year guidance when the median comps are 14 still is not of interest to me.

Hill: Good week for Okta. First quarter revenue for the identity management company rose 50% compared to a year ago. Shares of Okta up more than 10% on Friday, Jason, hitting a new high.

Moser: Okta is a tech company. I defy you to tell me otherwise. The good news is that they are growing very quickly. I can certainly understand why. We use Okta here at The Fool. It is a very good product. You look at the total number of clients now at 6,500-plus. New additions for the quarter, 450, contributing to that top line growth of 50%. Subscription revenue up 52%. Those subscriptions are nice because they're typically multi-year contracts, which offers some visibility. This business reminds me a lot of Zoom, that video conferencing company that we talk a lot about, in that it's technology built on today's cloud infrastructure, and it really does just work.

I think the big risk for a company like this really is security. They operate on this concept of the zero-trust security model, which essentially means never trust anything and always verify. I guess in today's world, that makes sense. I think that philosophy really needs to continue. If they sacrifice that mindset for the sake of profitability, that's when I'd start being really worried about a company like this. But generally speaking, I think they're doing everything they need to be doing. It's worth noting, the stock trades at an absurd valuation, 27 times sales -- it's not profitable. You do have to take that in consideration. Again, good business. I don't think I'd be buying stock today. But I would have it on the watch list for when that inevitable correction does come.

Hill: Shares of Williams-Sonoma up 12% on Friday after first-quarter profits came in higher than expected. Same-store sales up 3.5%, Ron. That's not enormous. That is, however, double of what was expected.

Gross: Maybe these guys have finally turned the corner. This has not been a good story over the last five years. In fact, the stock is down 14% over the last five years. Up 14% this year, but even taking that into account, still down over a five-year period. This time around, they did beat expectations. West Elm, 11.8% comp growth. That's a big number. Good to see that. Even positive 1.5% at Pottery Barn. You did see a decline in their namesake Williams-Sonoma stores of about 1.6%. Those stores continue to struggle. But the other brands seem to be making up for it. You saw an expansion in operating margins, which is great, great to see. As a result, adjusted earnings were up 21%, for a company that has not typically put up those kind of growth numbers. Perhaps some of the changes they've been making to merchandising and advertising is taking hold.

Hill: They've definitely had some store closures in the namesake Williams-Sonoma brand. How are they doing in terms of correspondingly ramping up the e-commerce?

Gross: E-commerce continues to be one of their focuses. It is supposedly a multi-channel company, but a lot of the things they sell don't necessarily translate that well to e-commerce. So it is an area of focus for them. I don't see it being a big part of the story, at least not yet.

One thing, interestingly, that they did highlight is that they were just named for the first time to the Fortune 500 of largest companies in the U.S. It's only a $4.6 billion company, which was puzzling to me. I had just assumed, incorrectly, that the Fortune 500 companies were larger.

Hill: Do they have jackets for that? Zynga is the social video game maker behind such hits as Farmville and Words With Friends. Zynga is not profitable, but the company just found a way to bring in hundreds of millions of dollars in one fell swoop: they are selling their headquarters in San Francisco. I was struck by this because, for all the times I've flown into the airport in San Francisco, you drive downtown, you go by this huge, iconic building that they've had with the Farmville logo on the side and all that sort of thing. I don't know -- do they now need to start a real estate business?

Gross: [laughs] Probably not. But I will say, I'm impressed with the management team that will make a move like this. I'm sure it was very prestigious to have that building. You mentioned you see it when you fly in. It's hard to let something like that go. But it is a great capital allocation decision if it doesn't make sense and you can capture that much money from it.

Moser: The first thing that comes to my mind is Zinga frozen yogurt. You ever go to Zinga around here? Zinga frozen yogurt. Maybe they should be looking past gaming and thinking about merging with a frozen yogurt company. It seems to me like the future might be a little bit brighter there.

One thing I will say in regard to Zynga is that they are pretty acquisitive. I think the problem there is that half of the total assets on the balance sheet, well more than half of the total assets, are attributed to goodwill. Take that for what it's worth. But that's a writedown waiting to happen.

Gross: Right. Goodwill is the amount of money you pay in excess of what a company's book value is when you acquire it. If you pay too much for a company, then a writedown typically ensues, which nobody likes to see. I think the reason they're acquisitive is because they have to grow somewhere. That's their growth story. Which, again, I think investors should be wary about. You need to see organic growth in a business. If a company's a serial acquirer just for the sake of growth, that often doesn't work well.

Moser: Yeah, I think with bigger companies, we talk a lot about Microsoft and the bungles they made on that side. They've written down billions and billions of dollars on the goodwill side. For a bigger company like that, it's really not as big of a deal. We do live in a non-GAAP world now where they adjust for everything. But with a smaller company like Zynga with less of a track record, those things will be taken under a little bit more scrutiny.

Hill: Let's get to the stocks on our radar. Our man behind the glass, Steve Broido, will hit you with a question. Ron Gross, what are you looking at?

Gross: Texas Roadhouse, baby, TXRH. Five hundred ninety locations across the United States. Great culture. Sound financials. Thirty-seven consecutive quarters of same-store sales growth. Seventeen-point-nine percent average dividend increase. The yield is currently 2.2%. Increased labor costs have hit the stock. It's off 30% from its high. I think now's a good entry point.

Hill: Steve, question about Texas Roadhouse?

Broido: I got to hear him speak at FoolFest. I think we had him last year or two years ago. Very compelling guy. If you've got a compelling CEO, is that a reason to buy the stock?

Gross: Well, that's certainly one factor I would put in place. Often, the stock price doesn't properly reflect a great management team, and it's one reason to own a stock.

Hill: Jason Moser, what are you looking at?

Moser: DocuSign earnings hit next Thursday. DOCU. The company that offers e-signature solutions that enable businesses to digitally prepare, execute, and act on agreements. Serves everyone, from small sole proprietorships to large enterprises and everywhere in between. It's evolving beyond just being the digital signature and really trying to become that entire workflow in regard to documents, agreements, and management there. I've used it oftentimes in real estate transactions and whatnot. Very compelling business. I'm interested to see what they say.

Hill: Steve, question about DocuSign?

Broido: Where are they going next?

Moser: Well, I think they're going into more management, storage, and helping companies manage that full workflow of document management.

Hill: What do you want to add your watch list, Steve?

Broido: I think I'm going with Texas Roadhouse.

Hill: All right. Jason Moser, Ron Gross, guys, thanks for being here!

Greg Fitzsimmons is one of the most popular standup comics in America. He has multiple standup specials on Netflix and Comedy Central, a popular podcast. Over the past 25 years, he's played in just about every city that has a comedy club. On top of that, he's won multiple Daytime Emmy Awards writing for The Ellen DeGeneres Show. He was in Washington, D.C., last week on his latest tour, and I caught up with him to talk about the business of comedy, the impact of Netflix, the role of social media, and how he got interested in comedy in the first place.

Greg Fitzsimmons: I really wanted to be a standup comic ever since I was a little kid. I would walk past the microphone and I had to pick it up and tell jokes. I watched every comedian on TV. I watched Carson every night. As a little kid, I watched Carson every night, stayed up late. I was fascinated by everything that had to do with comedy. When I got to BU, there was a comedy club called Stitches, which was literally, I could look at my dorm window and see the back alley that connected us to Stitches. And so I would go there and I would hang out and I'd watch the local comedians, Don Gavin and Kevin Meaney and Steve Sweeney, all these local legends that are still doing it to this day that are among the best comedians I've ever seen in my life. They just never left Boston. They had an open-mic night on Sundays, and it was called Comedy Hell. [laughs] Because it was so bad, hardly anybody would show up. And the host, George McDonald, would get up and go, "Welcome to Comedy Hell, where the pipe dreams of a bunch of comedy bozos can soar as high as the lights on Broadway, or crash and burn in that fiery pit known only as Comedy Hell." So that was my first. And the first time I performed in Boston was 1986 the night of the Super Bowl, when the Bears beat the Patriots by like 56-7.

Hill: Such a beatdown.

Fitzsimmons: So the crowd was even worse than usual. But I had a bunch of friends that came, so I had some shills. And they were laughing. And I did it, and I was like, that was it. A switch just turned, and I was like, this is what I'm going to do. And so I spent the rest of college going to comedy shows and performing.

Hill: Also going to class, too?

Fitzsimmons: Class during the day, and then at night, I would be out at the clubs. When you take the stage in Boston, there is not an acceptance that you are the funniest guy in the room. You have to prove it. They will heckle you if you're not doing well. I remember one time, this is my favorite heckle. I'm on stage, I've only been doing it for a couple of years, and I'm up there, and I mean, I'm getting nothing. And when they decide that you're not funny, they collectively just shut down. So I do a joke; there's no laughter. And then I overhear a woman in the front row say to her husband, whisper to her husband, "The poor bastard." [laughs] And that was crueler than somebody yelling "You suck!" from the back row. [laughs]

Hill: It's pity. It's just, you know what, hurl all the insults you want; please don't level me with your pity. So you talked about how hot Boston was in the late '80s and '90s. And then, of course, other cities around the country see what's happening in Boston, and started opening up. At The Motley Fool, we focus on investing and business and that sort of thing. From a business standpoint, it was a little bit like the .com bubble in 2000, 2001. You had these businesses that didn't really have anything supporting them. And all of a sudden, you've got Cleveland, Ohio, Dayton, cities across the country opening up all these clubs. And there's not really the talent to support it.

Fitzsimmons: That's right. That's what happened. Too many clubs opened too fast. What would happen is, they wouldn't get good comedians. So they started doing what they called papering the room, where they would give out free passes. So on a Saturday night, which should be a paying crowd, where you've made an investment to go see a show -- you're going to pay the 20 bucks, and it's going to mean something; instead, you're just getting free passes. You're getting telemarketed. People would get called at their house and go, "Hey, this is the Dayton Funny Bone. Do you want to come to a comedy show this week for free?" And people would go, "OK." And they kind of show up. They're like, "All right; we could have seen a movie." So you get these lethargic crowds, and mediocre talent. And so all of a sudden, these clubs just start hemorrhaging money and folding.

Another thing that killed it was, there was so much comedy on TV at the time. A&E alone must have had three standup comedy shows, where it was a host who would bring up three comedians in a half hour, each doing seven minutes. And that was a show. VH1 had a show, MTV had standup shows, Comedy Central had shows, HBO had shows. So all of a sudden, people were going, "Why would I pay to go out and watch it when I can sit at home and watch the same comedians for free?" That was another element that really hurt.

Hill: That also has to make it harder for you. As someone whose job is coming up with material, there's obviously a benefit both professionally and certainly economically to getting a half hour special on Comedy Central or something like that; but once people have seen that, that's essentially material that you almost can't go back to when you're touring around the country.

Fitzsimmons: When the original Borscht Belt comedians and Vaudeville comedians came up -- there's a great book, I believe it's called The Comedians, it tracks the history of standup comedy going back to burlesque and vaudeville. Those guys had one act, and they did comedy for 30 or 40 years. And they went from town to town to town. It was never the same crowds, never the same people, there was no TV exposure. So, that act actually got really good because they were honing it for so many years. And then with the advent of TV, yes, you had to start churning out new jokes all the time. And now with the internet, that's become exponential. Now you have to tweet out jokes all the time, you have to Instagram short videos of you doing jokes, people are recording you in clubs on their phone and uploading it to YouTube, and then you're doing one-hour specials. The public expects to be fed new material all the time, and when they're not, they lose interest. It's become, like, I'll finish this interview and go back to my room and write jokes for the rest of the day.

Hill: I'm taking you away from your job.

Fitzsimmons: Not at all! I'd much rather be doing this.

Hill: Let's go back to the early '90s, when the bubble starts to burst. What is that like for you and other comics who were coming up at that time? On the one hand, you've got this incredible training that you've undergone for years in Boston. If can get laughs at Nick's or Stitches -- by the way, how great is that for a name for a comedy club, Stitches?

Fitzsimmons: How about the fact that I was beat up on stage at Stitches? Literally. I had a guy from the Israeli army, a cab driver, sitting in the front row, heckling me.

Hill: And he came up on stage?

Fitzsimmons: He came up on stage, he came at me. And I hit him in the head with the microphone, and then he got me in a headlock, and he spun me around, and we knocked down all the tables. And then I got off stage. And then the owner, Harry Conforti, says to me, "All right, Fitzsimmons, you got five minutes left," and he sent me back on stage again.

Hill: Did he at least give you a Band-Aid or something?

Fitzsimmons: I wrenched my neck. I sent them the bills from the chiropractor's. They never paid them. Thanks, Stitches!

Hill: When did you start getting into writing on TV shows? I was looking at your IMDB page. It's very impressive, the list of shows that you've written on.

Fitzsimmons: I was hired to do audience warmup on Bill Maher's show on Politically Incorrect back when it was in New York. I was doing warmup and Bill liked my standup that I was doing during the warmup, so he hired me as a writer. So that was my first writing job. I didn't do much writing after that, but I got a taste of it. And I was like, "All right, this is really fun." I mean, being around the funniest, smartest writers around and sitting in a room with them and riffing was just a blast. And so then, when I had my son, I wanted to get off the road more. I was on the road 40 weekends a year. I had a kid and I was like, "All right, I have to rein it in a little bit." So I talked to Louis CK, who was a writer on Cedric the Entertainer Presents. And I said, "Louis, I have to get off the road. I'm missing my son." So he got me a meeting the next week with Cedric, and I pitched him some jokes and Cedric hired me. And ever since then, for the last 18 years, I've pretty much split my time between writing and standup.

Hill: I have to believe that given what Netflix has done in terms of the investment that Netflix has made in comedy, that has to be helpful to the comics industry, if only because they're investing money in comedy, so it's one more opportunity to pitch someone.

Fitzsimmons: It is. I think to an excess, though. There's been too many specials on Netflix, so it doesn't mean as much anymore. I think they recorded 100 last year.

Hill: Oh, yeah. You go back 25 years, the idea that someone, insert name of any comic, is going to have an HBO special, it was like, "Oh, my gosh!"

Fitzsimmons: Yeah, that really meant something. When Kinison did it or Bobcat Goldthwait or somebody, it made you a headliner that could command real money on the road. With Netflix, there have been some people that really popped. You have guys like Tom Segura, Bill Burr, Ali Wong. Guys, people. These are people that are going out, and they're playing 5,000 to 10,000-seat theaters because of a Netflix special. But there's also the 99 other people that maybe got a blip. Maybe it helps, but the algorithm of Netflix is that, if more people watch it, the more it gets put in front of you, and the more it gets watched, so it becomes very viral. It's a good thing. I did one, and I noticed some difference, but not huge.

Hill: You just reminded me of something, I think, on your podcast, when Neil Brennan was on, I think the two of you were talking about this. If you think back to definitely the 1970s, and probably for most of the 1980s, the crown jewel for any comic is five minutes on The Tonight Show with Johnny Carson.

Fitzsimmons: Meaningless now.

Hill: Yeah. But back then, if you got that, that was almost all your you needed. Now, yeah, it's nowhere near as impactful as sitting down with someone like you or Marc Maron or Joe Rogan.

Fitzsimmons: Without a doubt. You look at Rogan's numbers; he's getting millions of downloads per episode, and it's an hourlong interview with no commercials in the middle. And then you talk about doing five minutes on The Tonight Show, where I bet they get a million viewers, maybe, and you're the last five minutes of the show, when most people have gone to sleep or turned it off. And if they do watch it, that doesn't mean they're going to come out. Whereas the podcasts are generally done by standup comedians. The audience are people that are inclined to go see comedy shows. It's your audience that you're trying to reach.

Hill: You do standup, you podcast, you write, you've done acting, you've done voice work. What is the most satisfying to you personally? And what is the most profitable for the bottom line of Greg Fitzsimmons Incorporated?

Fitzsimmons: Development deals can be very lucrative. You get six figures on these development deals. So you try to land one of those every year. Corporate dates. I just did a corporate date this past week. That's a lot of money, but you have to be super clean. I did it for one of the biggest healthcare providers in the country. I won't say which one. But it's not enjoyable. You go up there and you've got to be squeaky clean -- no politics, no cursing, no sex. So you go up, this was at six o'clock outside in a tent, so it's light out. Everybody's senior executives, so it's very stuffy. And then they serve dinner to everybody as I was getting on stage. So good luck with that! But I guess other ways, the podcast adds up. Podcasting is turning into real money. The last four years or so, I could live off just the podcast if I wanted to. But a good network sitcom job, because I've worked my way up title-wise, is now probably the most lucrative of everything.

Hill: Is it harder today for comedians, from a business standpoint, because there are all these different options? Because there are so many avenues? It strikes me, it has to be harder, at least for comedians starting out, to get noticed. Or does the fact that they can post videos on YouTube for free make it even easier?

Fitzsimmons: There are a lot of headliners around the country that have social media following, and the clubs will book them when they have a million followers because they know they can get a crowd. This is kind of what happened when the last comedy bubble burst. They were booking headliners that they thought could draw -- there was a soap opera star named Walt Willey, yeah, exactly. They would put him into clubs. And crowds would leave, and they would go, "I'm never coming to the Dayton Funny Bone again because that was such a terrible experience." Clubs have to book great comedians, and there are enough great comedians right now. And they don't do that, and it's going to ultimately burn them.

But no, I think it's a meritocracy. I think if you're a really good comic, and you're in a big market, whether it's New York, L.A., Chicago, Boston, San Francisco, you will get seen. You'll eventually get asked to go to the Montreal Comedy Festival, where you'll get an agent, and the agent will push you out, and you'll get seen. If you have a unique voice, and you kill, and you make crowds laugh, you will move ahead. You'll get a writing job or you'll get on a sitcom. You'll get your shot. It may take years. Took me seven years until I got any notoriety, before I got really seen. The best thing that a comedian can do is, I believe, stay in a secondary market and get really good. Go to a place like Austin, Texas, Minneapolis, where you can actually work three, four, five nights a week, and not be seen by the industry. Get so good that when you come to New York or L.A., you're blowing everybody else off the stage, and all of a sudden you make some noise, and then you get a development deal, you get an agent, or whatever. And then things will happen from there.

Hill: I read in an interview you gave where you were asked the difference between a good comedian and a bad comedian. And you said a good comedian works from the inside out. A bad comedian basically takes the temperature and says, "Well, what do you want to hear? I'll say whatever to make you laugh." And a good comedian says, "No, this is my viewpoint. This is what I think. Hopefully you're going to enjoy it."

Fitzsimmons: Now what you're seeing more is, because of the internet, you can draw your audience. There's a really good article about business and being an entertainer, One Thousand True Fans I think is the name of the article. If you can get 1,000 people to follow you on Twitter and Facebook, and when you put out a book, they're going to buy it, when you do a show in their town, they're going to come see it, if you sell a T-shirt online, they're going to buy it -- if you can get those 1,000 people to really commit, you can make a living. Now you can attract your audience through social media and through TV shows. But there's enough where it can start with doing small clubs on the road, to doing small theaters. I could name 50 people that can go out on the road and play rock clubs or alternative venues, and the only advertisement they do is their podcasts, or their social media account. And they fed those people, they've given them a couple of tweets a day, and they've put out new material. You're rewarded by being able to fill up a room in markets all around the country, and be able to peddle your wares.

Hill: To hear the entire conversation I had with Greg Fitzsimmons, check out our Market Foolery podcast. We just published a bonus episode with the entire interview, unedited. Be sure to check out Greg's weekly show, Fitzdog Radio, wherever you get your podcasts.

That's going to do it for this week's show! Our engineer is Steve Broido, our producer is Mac Greer. I'm Chris Hill. Thanks for listening! We'll see you next week!

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Chris Hill has no position in any of the stocks mentioned. Jason Moser has no position in any of the stocks mentioned. Ron Gross has no position in any of the stocks mentioned. Steve Broido has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends DocuSign, Facebook, Microsoft, Netflix, Okta, Texas Roadhouse, Twitter, and Zoom Video Communications. The Motley Fool recommends Costco Wholesale, Grubhub, Uber Technologies, Ulta Beauty, Williams-Sonoma, and Zynga. The Motley Fool has a disclosure policy.