AI transcript
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0:01:04 There’s over 500,000 small businesses in BC, and no two are alike.
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0:01:32 Today’s number, $3.2 billion.
0:01:37 That’s how much MLS teams have surged in value since Messi joined Miami.
0:01:38 I hate being from Florida.
0:01:41 I think it’s the most fucked up state.
0:01:44 “Hold my sister,” said Alabama.
0:01:46 Does that make any sense, Ed?
0:01:47 Does that make any sense?
0:01:48 Kind of.
0:01:49 Kind of.
0:01:50 Instead of, “Hold my beer,” “Hold my sister.”
0:01:51 It’s an incest joke, right?
0:01:52 Yeah.
0:01:54 You’re catching on.
0:01:56 Anyways.
0:01:58 The strong start.
0:01:59 Thanks for that, Ed.
0:02:00 It’s very supportive.
0:02:12 Welcome to Prop G Markets.
0:02:16 Today, we’re discussing Lionsgate Steel with an AI company.
0:02:17 Oh, my God.
0:02:19 The union hasn’t protected them from AI.
0:02:23 Anyways, and Amazon’s return to work policy.
0:02:27 I think the return to work policy has worked to your fucking hands drop off
0:02:33 because daddy needs a hotter chick with a tighter thong, said Jeffrey Bezos.
0:02:39 But first, here with the news is Prop G Media Analyst Ed Elson.
0:02:43 Ed, what is the Palabra Buena, which is what we would say in Miami?
0:02:44 Not much, Scott.
0:02:45 I’m doing well.
0:02:46 I’m live from Sweden.
0:02:47 I’m in Stockholm at the moment.
0:02:50 I just did a talk for a private equity firm.
0:02:52 So, I’m kind of living the baller Scott Galloway life.
0:02:53 Tell me about that.
0:02:54 What did you speak about?
0:02:58 I spoke about Gen Z and how companies can best engage with us
0:03:00 because we’re a very unusual generation.
0:03:02 Can we just give you a bunch of Molly and a mutt and tell the–
0:03:03 Anyway, what do we do?
0:03:05 What do we do to engage Gen Z?
0:03:07 Well, that was what it was all about.
0:03:08 You’re giving it all away.
0:03:09 I’m not going to tell you about it
0:03:11 because I need people to pay me to tell them about it.
0:03:15 I am curious, though, because to be serious for a second,
0:03:17 people talk about how entitled they are in Gen Z.
0:03:19 And what I’ve generally found on granted,
0:03:23 Catherine’s done a good job of finding these overeducated,
0:03:27 hardworking employees, also you guys.
0:03:29 I was waiting.
0:03:31 It couldn’t be a compliment.
0:03:33 I’m consistently being very truthful.
0:03:35 I think it’s total bullshit this notion
0:03:38 that you need to engage them or they’re entitled.
0:03:40 I have found, generally speaking,
0:03:42 that every generation gets more and more impressive.
0:03:45 And that’s true for the youngest generation of the workforce.
0:03:48 They’re generally more talented, more fast solid technology.
0:03:52 In some, I think corporate America and especially my firms,
0:03:56 the information economy firms, run on the youngest generation
0:03:58 because they generally don’t have kids
0:04:00 so they can devote a ton of time to work.
0:04:03 The ambitious ones want to do nothing but work
0:04:05 because they want to get ahead.
0:04:07 They’re very in touch with technology.
0:04:10 And quite frankly, they’re just not asking for paternity
0:04:12 or maternity leave yet.
0:04:14 And they’re not thinking about these odd things in life
0:04:15 called balance.
0:04:17 They’re willing to work their asses off to try and establish
0:04:19 some currency in the professional market.
0:04:22 I think America runs on young people.
0:04:25 Yeah, I mean, I agree America runs on young people,
0:04:26 but I think you’re a little biased
0:04:28 because I think you’ve been surrounded by people
0:04:30 and you’ve created a culture where people are willing
0:04:31 to work very hard.
0:04:35 But no, I think young people have very high expectations
0:04:37 about what they want as employees.
0:04:41 And also a lot of my talk wasn’t necessarily about
0:04:43 hiring and employing young people
0:04:46 but also trying to sell to them
0:04:47 and how to capture their attention.
0:04:50 I think that in the age of social media
0:04:52 where you have billions of different voices,
0:04:53 billions of different companies
0:04:56 all competing for our attention,
0:04:58 I think companies are in a place
0:05:00 that they haven’t really had to deal with before
0:05:03 where they’re struggling to capture our attention
0:05:05 and engage it in a meaningful way.
0:05:07 Were you nervous before the gig?
0:05:08 Never.
0:05:09 Really?
0:05:10 I was extremely nervous.
0:05:12 One and a half percent of the time I speak,
0:05:13 I get a panic attack.
0:05:14 Oh yeah?
0:05:15 I just sort of blacked out during it.
0:05:18 I think I’d prepped enough where it wasn’t really
0:05:20 an issue for me and I kind of just,
0:05:24 my brain wasn’t even operating while I was speaking.
0:05:26 How does it work out for you?
0:05:29 Mine is more, I don’t know, just random.
0:05:31 It could happen in small groups or big groups.
0:05:33 I haven’t been able to figure out why it happens.
0:05:36 The only thing I could figure out is when I’m severely jet lagged,
0:05:38 sometimes I have a panic attack.
0:05:41 And for a while, right away,
0:05:43 the first time I went on Bill Maher,
0:05:46 in situations where I’m worried about it,
0:05:48 and I’m not proud of this, I’ll slam a beer.
0:05:51 Right before, because I’ve noticed before you do your speaking gigs,
0:05:54 I notice you go out the night before.
0:05:57 But maybe that’s just because you always go out and drink anyway.
0:06:00 Yeah, that’s just because it’s a night.
0:06:02 That’s not a strategy.
0:06:04 That’s just because I’m in a strange city and I want to find out
0:06:07 if there’s hot people who like alcohol and are going to be impressed by me
0:06:12 because I’m speaking at some National Cotton Growers Association the next day.
0:06:15 Because I was thinking maybe you liked being hungover or something,
0:06:17 that it sort of calms you down.
0:06:19 Oh yeah, that’s a ton of fun.
0:06:22 It’s great to walk around like you just went through your third battery, a chemo.
0:06:24 Anyways, get to the fucking headlines, Ed.
0:06:27 Let’s do it. Let’s start with our weekly review of Market Vitals.
0:06:33 The S&P 500 rose.
0:06:36 The dollar drops to a low for the year.
0:06:39 Bitcoin climbed and the yield on tenure treasuries increased.
0:06:41 Shifting to the headlines.
0:06:44 The Federal Reserve cut interest rates for the first time in four years
0:06:46 by 50 basis points.
0:06:49 That was double what most economists had predicted.
0:06:51 Markets initially surged following the announcement,
0:06:54 but the three major indices ended the day lower.
0:06:58 United will soon offer free Wi-Fi in more than 1,000 planes
0:07:02 after reaching a deal with SpaceX to install Starlink on its entire fleet.
0:07:05 This is Starlink’s biggest in-flight connectivity deal yet,
0:07:09 and it will bring its total aircrafts under contract to $2,500.
0:07:13 BlackRock and Microsoft are launching a $30 billion fund
0:07:16 to invest in AI infrastructure.
0:07:19 The Global AI Infrastructure Investment Partnership
0:07:22 will build more data centers to meet the growing energy demands
0:07:24 from gen AI and cloud computing.
0:07:28 And finally, Instagram is putting users under the age of 18
0:07:31 into teen accounts, which will be private by default.
0:07:35 The platform will also use AI to help verify a teenager’s age.
0:07:38 The teen accounts will immediately begin rolling out in the US,
0:07:41 Canada and the UK, and they will eventually expand
0:07:43 across all of Meta’s platforms.
0:07:46 Scott, your thoughts beginning with the rate cut.
0:07:51 I think the most consequential person of the last several years.
0:07:54 Yeah, is that true? Putin or Trump probably or Biden?
0:07:58 Okay, like one of the most consequential people has been Chairman Powell.
0:08:02 And he pulled off sort of the impossible and it looks like we’ve had
0:08:07 the kind of consummate, you know, Simone Biles stick to landing soft landing.
0:08:11 And that is a soft landing is meant to cool the economy when you have inflation
0:08:14 while not nudging it into recession.
0:08:16 And it looks as if he’s pulled that off.
0:08:18 We’re beginning a rate cutting cycle.
0:08:23 What was unusual was coming in with kind of a hammer with a 50 BIP reduction.
0:08:28 It’s usually 25 and they usually don’t do that unless they’re worried about a recession.
0:08:30 But we’ve seen unemployment tick up.
0:08:34 And at the same time, inflation is now almost at its target rate.
0:08:39 So, you know, this guy’s just shown kind of like ninja like capability here.
0:08:43 And now they’re thinking that maybe the unintended consequences
0:08:48 of these exceptionally high interest rates that kept people nailed to their home
0:08:52 where they kind of had this, you know, unexploded devices in the home
0:08:55 called a mortgage 2.5% where you couldn’t move.
0:09:00 That there’s all this pent up demand of people who want to move back closer to the family,
0:09:03 you know, debt, disease, divorce, want to sell their home,
0:09:05 but haven’t because they didn’t want to give up that mortgage.
0:09:09 But if mortgage rates do come down substantially,
0:09:14 it’s going to free up a ton of supply in the housing market among the nonmovers
0:09:18 who are willing to give up, you know, 200 BIPs for a worse mortgage
0:09:22 and that additional supply will actually bring housing down.
0:09:26 So for me, the most interesting thing about all of this will be housing,
0:09:28 but the market seemed to like it.
0:09:32 Typically after we start a rate cutting cycle, the market goes up 12% to 14%,
0:09:35 but kind of all bets are off here.
0:09:40 And you know, we’ve seen the dollar come down, which makes sense given that interest rates are coming down,
0:09:46 but in general, you know, I just think it’s hilarious that everybody who’s either watched a commercial
0:09:50 or seen a logo thinks they’re an expert in advertising or design or has a kid in school
0:09:54 and thinks they’re all of a sudden an education expert than anyone that has ever spent money
0:09:56 has a view on what chairman Powell should do.
0:09:58 So what do I think he should do?
0:10:02 I think he should do whatever the fuck he thinks we should do because the guy has put on a masterclass.
0:10:03 What are your thoughts?
0:10:05 I was going to say that exact same thing.
0:10:12 I mean, I have read and heard and seen a million different hot takes from podcasters
0:10:17 and political commentators and people at cocktail parties on what the Fed should do.
0:10:22 Everyone has their own opinion on what the correct monetary policy for the US is,
0:10:29 but there is one guy who is best positioned to have a good hot take on monetary policy.
0:10:34 There’s a guy who’s got the most experience, expertise, the best access to data.
0:10:37 He has everything and it’s Jerome Powell.
0:10:38 It’s the guy in charge.
0:10:42 So I don’t have a take and nor should anyone else.
0:10:44 The only guy who should have a take is Jerome Powell.
0:10:45 I agree.
0:10:46 Should we talk about Starlink?
0:10:47 Yeah.
0:10:50 So I don’t know if you’ve sensed this, but I’m actually not an enormous fan of Elon Musk.
0:10:51 Really?
0:10:54 But I just, I don’t think there’s any getting around it.
0:10:57 I think Starlink is going to be the technology of 2025.
0:10:58 I think this thing is amazing.
0:11:03 I mean, effectively, all strategy comes down to clearing three hurdles.
0:11:07 The first is, is your product or your service truly differentiated?
0:11:12 And it doesn’t have to even have product differentiation, but otherwise if it doesn’t have product differentiation,
0:11:17 you’ve got to inculcate emotional or cement emotional association such that people think,
0:11:21 “Oh, I feel better wearing a Panerai even though it tells the same time as anywhere else
0:11:26 because they’ve convinced me that it was Italian submariners and I feel more Italian and masculine.”
0:11:33 You have to honestly say, does this strategy clear the hurdle of differentiation from our competitive set?
0:11:35 If you do that too, relevance.
0:11:37 Does anyone care about a differentiation?
0:11:42 Back in the 2000s, I was asked to work on this brand strategy for the Haas School of Business,
0:11:44 which is Berkeley’s graduate school.
0:11:47 And they were thinking about becoming the internet business school.
0:11:49 And I said, “Well, it’s definitely differentiated.
0:11:52 The problem is for how long will it be relevant?
0:11:58 Will there be a new technology yet to be determined that makes a focus on the internet irrelevant?”
0:12:01 And the thing about differentiation and relevance are the two hurdles.
0:12:03 Is there a national conflict with each other?
0:12:06 And that is, Kleenex is highly relevant to people.
0:12:08 It’s very hard to differentiate.
0:12:11 Ferrari is highly differentiated, not that relevant.
0:12:15 Most people are never going to be in the market for a $450,000 car.
0:12:21 If you manage to find something that’s both differentiated or build something that’s both differentiated and relevant to consumers,
0:12:25 then you got to focus on, all right, sharks are going to come for us.
0:12:27 Megalodons are going to come for us.
0:12:29 Competitors are going to come for our lunch.
0:12:34 What modes can we put up such that our differentiation and relevance is sustainable?
0:12:36 Differentiation, relevant sustainability.
0:12:40 Now, the differentiation here is tangible.
0:12:45 I can get a call from my son in the middle of a commercial flight on FaceTime,
0:12:47 and it is crystal clear, perfect.
0:12:51 They’re sitting there eating bad lamb, signing up for go-go fucking wireless eight times.
0:12:55 I’m wondering if I’m going to get eight charges for $19.95.
0:12:58 This product is highly differentiated.
0:12:59 It’s relevant.
0:13:03 Energy and broadband, we never have enough.
0:13:08 The world’s appetite for energy and broadband and bandwidth is never sated.
0:13:14 There’s always new applications and new ways to use, you know, wind energy, nuclear energy, fossil fuel energy, whatever it is.
0:13:19 There’s always the new apps that come out will always absorb all the bandwidth
0:13:22 and processing power we can produce.
0:13:29 And then the thing that just blows my fucking mind here is they control two-thirds of the low-orbit satellites,
0:13:34 and they have this infrastructure called SpaceX that has revolutionized space hauling,
0:13:44 or specifically, it can get shit into space satellites for much less money than NASA or any other space hauling company.
0:13:48 So all three of these things just add up to just disco.
0:13:54 Now, the company’s trading at about a quarter of a trillion-dollar market cap in the private market,
0:13:58 so word is out about how well these guys are doing.
0:14:04 They’ll do about 13 billion this year in revenues, meaning that its most recent valuation of 210 billion,
0:14:08 that it trades at about double the price-to-sales ratio of Tesla.
0:14:14 We predicted a couple years ago that we thought SpaceX was going to be worth more than Tesla,
0:14:16 but I think this thing is just amazing.
0:14:22 Well, you have to remember is that Starlink is a one part of the SpaceX business.
0:14:29 It’s estimated that Starlink is going to generate this year $6.6 billion in revenue.
0:14:34 And just to put that into context, OpenAI, which is the hardest startup in the world,
0:14:39 their expected revenue for 2024 is $3.4 billion.
0:14:46 So just Starlink alone has basically doubled the business of OpenAI,
0:14:50 and that doesn’t even include all the rest of it that SpaceX is engaged with.
0:14:57 Yeah, I think this is an incredible company, and that giant valuation premium that you’re seeing,
0:15:00 I think in this case is totally warranted.
0:15:10 I mean, what companies other than Big Tech control 60% to 70% of a market,
0:15:14 and it’s not a niche market, this is a market that we all will depend on.
0:15:18 I’m also very excited to try it out because I’ve heard a lot about it from you,
0:15:23 from people who own yachts or have chartered planes.
0:15:27 For some reason, that’s the only place that Starlink seems to exist.
0:15:30 So I’m excited for them to bring it to the masses with United.
0:15:32 Shall we talk about BlackRock and Microsoft?
0:15:38 Yeah, so my initial reaction is that Microsoft should be in the business of AI infrastructure,
0:15:43 but at the same time, they are now the most successful corporate venture firm in history
0:15:45 with their investment in OpenAI.
0:15:51 So I can not based on the increase in valuation of what is supposedly 150 billion that OpenAI
0:15:55 is supposedly raising money at, but because of what it’s done to Microsoft stock.
0:15:58 So I can see why they would do this.
0:16:03 Everybody is talking about AI infrastructure specifically trying to create some form,
0:16:08 or trying to create the, not only put in place the processing power, but the power generation.
0:16:13 One ChatGBT request requires 10 times the energy of a Google search.
0:16:20 This is a big issue, not only for societies, but these organizations now say that choke point
0:16:25 around progress around AI and our ability to offer better AI applications,
0:16:32 the choke point, the friction point, as we map out the supply chain, might be just straight energy.
0:16:36 And they’re thinking, okay, maybe we control the infrastructure and the energy.
0:16:38 And there’s a bit of a lesson here.
0:16:44 And that is, I think it’s really helpful and fruitful for entrepreneurs to say, okay, I’m in the business.
0:16:48 I don’t care what it is, a taco truck, or I’m starting a consulting firm.
0:16:53 Map out literally from, not from birth, but who is your customer?
0:16:58 How is that customer even developing a need for your product?
0:17:00 What situation, what emotional state?
0:17:01 Where do they learn about it?
0:17:03 Where do they intend to buy it?
0:17:04 How do they buy it?
0:17:05 How do they consume it?
0:17:07 What is the consumption process like?
0:17:09 What works, what doesn’t work?
0:17:12 How do they feel about the product and the brand after?
0:17:17 Just literally map out the entire customer journey and then start saying, and VCs call it pain points.
0:17:19 They call it friction points.
0:17:21 What is the friction in the business?
0:17:24 And that’s one of the first things I ask anyone who’s asking me for money.
0:17:26 I say to them, what is the friction in the business?
0:17:28 And I say, what do you mean by that?
0:17:38 If you could have 10 super talented people right now, or $10 million in fresh capital, or 10 fantastic, huge clients, what would you rather have?
0:17:39 What’s the friction in the business?
0:17:42 Is it clients, is it capital, is it people?
0:17:49 Because a lot of people don’t, entrepreneurs just sort of think it’ll naturally come to them, but really think through, what are the friction points?
0:17:56 And the reason I’m bringing this up in this context is I believe that a lot of these companies are now seeing not just GPUs.
0:18:01 There’s enough companies coming for Nvidia’s launch, including TSMC.
0:18:06 I think Meta announced it’s going to start designing its own AI chips.
0:18:11 I think the companies look at power and energy and think this could be a big problem.
0:18:12 What are your thoughts on?
0:18:15 Yeah, I think energy is the story here.
0:18:18 That’s why utilities have been the best performing sector of the year so far.
0:18:25 Utility stocks have been outperforming tech stocks because everyone’s realizing if AI is coming,
0:18:28 then we’re going to need three times more energy than we produced today.
0:18:34 I mean, data center energy demand is expected to triple by 2030.
0:18:36 I think most people are understanding that.
0:18:39 I think we’re seeing sort of a re-embrace of fossil fuels.
0:18:45 I mean, the most telling thing was the fact that Kamala Harris in the presidential debate bragged about domestic oil production.
0:18:49 You would have never seen a Democrat doing that a few years ago.
0:18:54 But the other thing people do need to keep in mind is that fossil fuels aren’t even going to be enough.
0:18:56 We’re also going to need renewables.
0:19:03 So any entrepreneur who’s innovating in the energy space right now, who’s figuring out a way to just create more energy,
0:19:06 those are the entrepreneurs that I would want to bet on.
0:19:12 One other observation about the fact that we’ve got Microsoft partnering with BlackRock,
0:19:14 and this is a $30 billion fund.
0:19:22 That’s going to be raised through equity investments, but they’re also supposedly going to raise another $70 billion in debt.
0:19:26 So what you have is Microsoft teaming up with BlackRock,
0:19:32 the largest asset management firm in the world, to manage $100 billion in AI investments.
0:19:36 And I look through kind of the history of the most enduring businesses.
0:19:40 Like, you know, you look at the banks, for example, Wells Fargo.
0:19:42 This was a shipping business.
0:19:45 They were in the business of transporting gold.
0:19:49 And over time, they accumulated assets and they offer other things too.
0:19:51 But ultimately, it’s asset management.
0:19:56 And you look at Lehman Brothers, it was a similar thing, except it was shipping cotton.
0:20:02 And so my theory is that if you want to be a company that lost hundreds of years,
0:20:06 ultimately, you’re going to have to get into the asset management business.
0:20:12 You’re going to have to switch from being a company that makes things to a company that owns things.
0:20:15 And if you look at what Microsoft has been doing in the past year,
0:20:23 I feel like Microsoft is laying the groundwork to eventually become just an asset management firm.
0:20:28 And it feels like if you want to buck Aswath Damodaran’s corporate life cycle,
0:20:33 you do have to turn into a zombie, which basically just means you just need to own as much shit as possible.
0:20:35 And that’s how you generate your return.
0:20:36 I think it’s really interesting.
0:20:40 And I was thinking about my first reaction was, no, that’s not true.
0:20:46 The companies that have created hundreds of billions, if not trains of dollars in value over the last 20 or 30 years
0:20:48 are these young companies that are asset-like.
0:20:53 But your point is, okay, fine, but those companies are also really vulnerable
0:20:58 because it’s essentially a thick layer of software off of some consumer trend or some IP
0:21:00 that’s very hard to defend over the long term.
0:21:08 And the companies that have staying power sit on hundreds of billions of dollars in insurance, Berkshire Hathaway,
0:21:15 or own the bank or own the utility or whatever it is and just sort of clip coupons.
0:21:19 And while it’s lower growth and it kind of plays into Aswath’s thing is that
0:21:25 biology is impossible to ignore even in business, that you don’t stay a teenager for very long.
0:21:27 And eventually you got to realize, okay, I’m a baby boomer now.
0:21:31 And my job is not, if you will, to kind of work hard or innovate or be creative.
0:21:33 It’s to own shit.
0:21:36 And I think that’s really interesting.
0:21:42 The question I have is, did you try that theory out on any of the unsuspecting Swedish ladies
0:21:44 down at that cheap hotel bar last night?
0:21:49 And then they’d say, oh no, my reindeer’s here to take me to Fondue.
0:21:52 Why does that make me happy?
0:21:54 Why does that make me?
0:21:59 Is that a hate crime to categorize and stereotype Swedish is riding reindeer and eating fondue?
0:22:01 That’s what’s going to really offend people.
0:22:07 Let’s move on to Instagram and this new age-gating policy.
0:22:13 I mean, you’ve been calling this, you’ve been calling for this for years.
0:22:20 I assume this isn’t exactly what you were hoping for, but what are your reactions to Instagram?
0:22:22 Finally, slightly listening to Scott Galloway.
0:22:27 Well, okay, so Adam Massari seems like a lovely guy and he’s the new Sheryl Sandberg.
0:22:29 They’re like, oh, people think you’re lovely and you sound sincere.
0:22:33 So let’s use you as our heat shield so we can keep acting like Mendacious Fox.
0:22:39 And both the alcohol and tobacco industries on the eve of legislation would say, oh no, we’re self-regulating
0:22:42 and you don’t need to do this because look what we’re doing to ourselves.
0:22:49 And their whole go-to through all of this, through the suicide, the self-harming, the election misinformation
0:22:53 was to say these issues would just be too complex to solve.
0:22:59 And then what do you know? They figured out pretty easily that they can tell using AI when someone is under the age of 16
0:23:04 and they send them a prompt saying, we need you to give us your age.
0:23:07 And if they looks as if they’re lying and they can perceive that pretty easily,
0:23:10 they ask you to upload a federally issued identification.
0:23:12 No must, no fuss, pretty fucking easy.
0:23:19 But the geniuses couldn’t figure it out until the Children’s Online Safety Act was about to be passed.
0:23:25 So look, great, I hope they do it. Kudos to Adam, but be clear.
0:23:28 These people are Mendacious Fox.
0:23:36 They are only doing this as a prophylactic such that they stave off regulation which is now imminent.
0:23:38 So great, I hope they do it.
0:23:42 It would be a nice start for the bad folks at Metta.
0:23:49 But this should not in any way curtail the legislation or slow it that is required.
0:23:53 Because when we call on the better angels of these companies, they do not show up.
0:23:57 So great, great, they’re doing it fine.
0:24:04 Don’t believe it, assume they are not genuine about it and make sure we have legislation. We need laws.
0:24:08 We’ll be right back after the break with a look at AI in Hollywood.
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0:25:19 Well, apparently very well on some of the most innovative sleep technology out there.
0:25:23 Aid Sleep is revolutionizing the way we sleep with what they call the pod.
0:25:30 You can add the pod to your current mattress like a fitted sheet to automatically cool down or warm up each side of your bed.
0:25:34 They’ve just launched the newest generation of the pod, the Pod 4 Ultra.
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0:25:42 It can also track your sleep time, sleep phases, heart rate and even your snoring.
0:25:45 And you know who’s gotten to try out the new pod?
0:25:49 What do you think, Ed? Tell us about your experience with the pod.
0:25:51 I love it, Scott. It’s great.
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0:27:33 Film Studio Lionsgate has struck a deal with a startup called Runway to create a custom AI model for production and editing.
0:27:37 This is the first partnership of its kind between a major studio and an AI company.
0:27:42 Runway will train the model on Lionsgate’s cast log of more than 20,000 film and TV properties.
0:27:48 Initially, they plan to use it to develop storyboards, but eventually it’ll be used for backgrounds and special effects.
0:27:54 According to the vice chairman of Lionsgate, the model will save the studio, quote, “millions and millions of dollars.”
0:28:00 Scott, Gen AI was a huge point of concern during the right to strike.
0:28:06 We’ve talked about it a little bit before. What do you make of this deal in light of that conflict?
0:28:17 So what happened with, I think, the way I would assess the right to strike is that the atmospherics were such that the creative community was just losing a ton of leverage.
0:28:22 Because it had grown too fast. They had a sugar high from the out of control kind of content wars.
0:28:29 It was slowing down. It was rationalizing. So the oxygen was coming out of the room and the right to scale decided to strike at exactly the wrong moment.
0:28:34 Providing them with a multilateral force pause and spending, which was a gift to them.
0:28:37 And so it was like they had no negotiating leverage.
0:28:44 And so after five months, when they took their members and said, “We want you to make no money for five months, such that we can go get you a 5% increase in salary,”
0:28:49 which barely covered the inflation that was registered during the time they were out making zero money.
0:28:57 And I’m pretty sure they sat down with the studios and said, “Okay, can you put in some language such that we can pretend we got some protection around AI?”
0:29:08 And a language was literally like the studios agreed to discuss any use of AI. It’s like, “Okay, bitch, we’ve discussed it. Now welcome to your AI twin.”
0:29:12 And there’s some things in there that were always illegal.
0:29:23 Yeah, it basically said, you can use AI, but we have to receive credit and compensation if our work was used as an input. That was federal law.
0:29:32 Yeah, so it’s like saying to them, “I remember when I was in business school in my second year, we actually had a professor saying, ‘You’re not allowed to use spell check.'”
0:29:36 I’m like, “What? Not allowed to use spell check? What do you mean?”
0:29:44 I mean, or there was a big movement among teachers not to let kids use calculators in class in the ’70s.
0:29:51 There’s no putting the genie back in the bottle here. The good news for creators is I’m about to go into a writer’s room at, I don’t know if you’ve heard of,
0:29:57 sold an original scripted drama to Netflix that was “Bot in the Room,” which is “Lingo for I rock the fucking house.”
0:30:02 “Bought in the room.” As in, you went in, you pitched it, and they bought it.
0:30:08 Oh, and you clearly don’t understand the machinations, the inner workings of Hollywood. I didn’t know it either, actually.
0:30:19 There’s a term called “Bot in the Room,” and our pitch was “Bot in the Room.” And it was absolutely my incredible insight, not Rosamund Pike reading the script.
0:30:27 I could watch her read the phone book, by the way. Literally, I saw these people just sitting there like they were being like a baby in a lullaby when she started reading.
0:30:35 Anyways, the good news for creators, I’m using AI a lot. I think of myself as a creator. It’s an amazing partner.
0:30:40 Just as Google was an amazing resource, this has just taken it to a new level.
0:30:52 So what I do think it’ll have a bigger impact on, though, is some of the infrastructure around storyboards. I mean, just as a green screen, probably reduce production costs, because we don’t need to go to Antarctica to film the scene.
0:31:02 You think that’s only going to get better and better and better. I think the thing that is going to hurt this industry more than AI, which always has a kind of a boogeyman factor to it.
0:31:14 Technology feels scarier because these people don’t understand it. It’s some really boring shit, and that is it is cheaper to produce films now in Albuquerque, New Mexico, Dublin, Ireland, Seoul, Korea, and Madrid than it is in Los Angeles.
0:31:26 And it’s essentially just as it became easier to produce a world-class car in Japan and South Korea than, I guess, China to a certain extent. The same thing’s happening to Hollywood.
0:31:33 It’s really interesting. Hollywood’s becoming Detroit, and they’re going to blame AI because they don’t understand it, and it sounds more spooky and scary.
0:31:43 The cost reductions and threats of AI will be incremental. The thing that is going to kick the shit out of Hollywood, and I think already is, is just globalization and outsourcing to other nations.
0:31:52 Yeah. I mean, I think this whole headline is basically just a giant victory lap for us, mostly you, but…
0:31:57 You’re sounding like Sarah Swisher. We were right. And I was right.
0:32:07 Let me just point out that something I think people forget is that the original demand of the writers was that you’re not allowed to use AI.
0:32:08 Look at that.
0:32:14 They literally said to the production studios, “You’re not allowed to use it. That’s our demand.” And the studio said, “No.”
0:32:25 And then they came back a few months later, and as we pointed out, they said, “Okay, you can use it, but you need to credit us,” which, as we have discussed, was not a win because that was already federal law.
0:32:29 So they lost five months of pay to achieve nothing, basically.
0:32:39 And the reason I want to point out the victory lap is because everyone said that they won. Everyone said it was a victory for the writers.
0:32:53 I have some headlines here from Jacobin magazine, quote, “Hollywood writers score historic victory.” Here’s an article from The Guardian, “How Hollywood writers triumphed over AI and why it matters.”
0:33:02 And there was, I mean, you were getting a lot of shit from a lot of people for saying, “Look, I think this is a shitty deal, and the writers have not won.”
0:33:11 I mean, you were predicting they wouldn’t win, and we looked at the agreement with the WGA set with the production companies, and it was a shitty deal.
0:33:22 And here we are a year later, and there is a headline saying that one of the biggest production companies is going to partner with an AI company to do all of its graphics and its storyboarding.
0:33:26 And obviously, it’s not going to just be storyboarding. That’s what they’re saying right now.
0:33:35 It’s going to transition to editing, and then to production, and then to writing. It’s going to keep on snowballing until, yeah, we don’t need set designers.
0:33:43 We don’t need makeup artists. We don’t need graphics editors, et cetera, et cetera. This is clearly the beginning of the end for Hollywood.
0:33:51 Box office sales are down 10% this year. That’s expected. The cinema is dying. Theatre attendance down 40% in the past decade, also expected.
0:34:03 Film and TV production down 40% this year, and unemployment in Hollywood is 13%, which is triple the national average.
0:34:14 To transition out of this run, what I would ask of you is you’ve probably got a lot of people in Hollywood who don’t like you, except for your friends who are in the writers’ room with you and Rosamund Pike.
0:34:22 But there are a lot of people in Hollywood who probably think, “Fuck that guy, Scott Galloway, who seems to be preying on our downfall.” That’s not what you’re doing.
0:34:34 But what would be your advice to someone in Hollywood, call it a makeup artist, who might be listening to this podcast right now, and needs to figure out something?
0:34:43 They’ve got to change something, because you cannot just expect the WGA or your union to figure it out for you. What would be your advice to those people?
0:34:53 The question you just asked me is the question, I track all my inbound emails, and the number one inbound email used to be, “Is it too late to find video?”
0:35:05 But by far, if I looked over the last five years, what is essentially the subject of queries I get in my email inbox, and it’s, “What should I do? Is it too late for me to transition out?”
0:35:15 And the reality is that there’s no silver bullet, and it’s very situational. What I think the process for trying to figure it out is to say, “All right, what are my advantages?”
0:35:27 And if you’re young, one of your big advantages is your mobility. So if you think about what’s happening to the creative community, it’s not that it’s going away.
0:35:38 It’s that it’s being disrupted and going to a lower cost producer. So content spend is still growing. Content is up 2% this year, but it’s growing outside of the U.S.
0:35:49 This year, Netflix’s international content spend will surpass U.S. spending for the first time. Why? Because producing squid games in South Korea was 10 times cheaper than producing stranger things in the U.S.
0:35:56 Content spend through 2028 will decline over 20% in North America and grow in South America, Africa, Eastern Europe, and Asia.
0:36:08 So this sounds very basic, but the first question I’d ask is, “If you’re in LA and having trouble paying $3,500 through your one-bedroom apartment, are you mobile?”
0:36:18 Because that’s an advantage. Because if you’re mobile and you’re talented, I would think really thoughtfully around, “Where is the economy in the creator economy growing?”
0:36:26 And why wouldn’t you move? Because a lot of us can’t. Once you have kids and dogs, it gets harder and harder to move. So the first is leaning into your strength, your mobility.
0:36:31 Well, they’re all that because they want to hang out at the shots of my mom and they want to go to the bungalows.
0:36:40 I 100% get that. But they have beer and Dublin and I heard Albuquerque. Well, I don’t know. I don’t know. I’ve only been to South Korea once.
0:36:50 So this is going to sound past A. Lean into how American you are. And that is America started out as an agrarian society.
0:36:58 We had huge crops, huge natural resources. Then we moved to a manufacturing economy and we were the best in the world.
0:37:03 Then when other places, it started getting outsourced to lower cost manufacturers, we became a services economy.
0:37:07 We had the best M&A law firms and investment banks and consulting firms.
0:37:16 And then we became essentially technologies now, the tail wagging the dog. We are the most agile society that’s ever been created.
0:37:24 Now, we have a lot of built-in advantages in terms of friendly candidate of the north, harmless Mexico to the south, oceans protecting us from everyone.
0:37:28 We have more natural resources than anyone. We are blessed a lot.
0:37:33 But our agility is really what has continued to make us the economic miracle.
0:37:42 And ask yourself, how can I be as agile as possible? How do I create a clean slate of where I need to be?
0:37:53 And also, what I will say about your generation, I was with a group of people in New York last time I was there and this woman was working in interior design.
0:37:57 And she said, “It’s just so expensive here.” I’m like, “Well, you have to mind New York.”
0:38:01 And she literally looked at me and she’s like, “I think I’d kill myself if I had to leave New York.”
0:38:13 You realize that there’s 7.5 billion people and 7.499 are reasonably happy not living here.
0:38:26 And it feels as if, and I’m becoming a boomer, I do meet a lot of young people that are under the impression the world owes them the ability to live in New York or LA.
0:38:27 That’s right.
0:38:35 And, okay, get past that. There’s a lot of people who are really happy, are really happy in St. Louis.
0:38:44 And figuring out a way to write software manuals, which might sound awful, but they can do it from their house and they have nice homes and nice families.
0:38:47 And they’re doing just fine and they live a nice life.
0:38:54 But what is it, lean into your strength? It’s your strength, your flexibility, your agility, get a group of people who can help you.
0:38:56 Don’t be afraid to ask for help.
0:39:04 A lot of young people, especially in this Instagram generation, want to pretend that their life is just fucking Dom Perignon and Gulf Streams and are embarrassed to ask people for help.
0:39:08 Like, “Oh my God, I don’t know how I’m going to make a living. I need help.”
0:39:12 Greatness is in the agency of others. It is really hard to read the label from inside of the bottle.
0:39:14 Find people who can advise you.
0:39:18 Recognize if you have to leave LA or New York, you’re going to be just fine.
0:39:28 The majority of people have done it and recognize it might be what they say when God closes a window, we open the door.
0:39:30 Also, the Boeing CEO said that, Ed.
0:39:32 But, get it?
0:39:38 I must go find my reindeer and go get fondue. Please leave me alone.
0:39:41 Unattractive, unattractive man from Brooklyn.
0:39:45 I don’t care what you are telling the national cotton growers of Northern Europe about.
0:39:52 We’ll be right back after the break with a look at Amazon’s new return to work policy.
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0:43:18 We’re back with ProfG Markets.
0:43:22 Amazon is calling its employees back to the office five days a week.
0:43:26 That’s a step change from its current three-day-a-week policy, which will expire at the end of the year.
0:43:31 In a memo to staff explaining the reasoning for the new policy, CEO Andy Jassy wrote,
0:43:36 “Keeping your culture strong is not a birthright. You have to work at it all the time.
0:43:44 When we look back over the last five years, we continue to believe that the advantages of being together in the office are significant.”
0:43:47 Scott, what do you make of this strategy?
0:43:51 Look, I think that it doesn’t surprise me.
0:43:56 The really unusual or the most enduring thing about COVID, or the most enduring structural shift,
0:44:04 is the intersection between human and financial capital, which is basically a fancy way of saying remote work is probably the biggest structural change.
0:44:11 Amazon gets to dictate the terms of their employment or employees, and if people don’t like it, they can find another job.
0:44:20 Where I think it’s tough, and our producer, Claire, pointed this out, is that they might lose a lot of mothers or new mothers,
0:44:27 where women are always going to bear a greater share of whatever you would want to call it, care.
0:44:36 And that’s not fair, and I salute people, couples, for sharing the work equally, and we shouldn’t expect that to be the case.
0:44:39 But it is the case, and it will be for a long time.
0:44:46 So how does the corporate world respond to the notion that they’ve done a great job elevating women who aren’t married and not having kids?
0:44:54 Single women under the age of 30 are now earning as much or more than men, and they should because they’re seeking tertiary education at greater ratios,
0:45:04 so they should make more money. But what do we do about the kind of stagnant problem of women once they decide to leverage their ovaries that go to 73 cents on the dollar?
0:45:13 The real kind of miss or dysfunction in corporate America is still how do you maintain and engage mothers?
0:45:18 How do you maintain their career trajectory? How do you keep them engaged at work without making their life just fucking impossible?
0:45:29 Well, we basically say to women who want to be successful in terms of the corporate world, and also as is the case in, I think, 60, 80, 90% of families will burden a disproportionate amount of the work.
0:45:35 The answer isn’t just to say, well, men should do more work at home. Okay, good luck with that, and Facebook should be nicer people.
0:45:41 What we need, in my opinion, is a new classification of worker that is called the care worker.
0:45:53 You have kids, you’re taking care of an elderly parent, you have a different set of rights, or the company says we’re care worker friendly and says we’re going to make accommodations for you.
0:46:09 We’re going to figure out a way that you can work remotely one or more days a week, and we’re going to do our best to maintain your income trajectory because the nation will pay one way or another if we have a lack of care at home,
0:46:21 whether it’s kids ending up with mental health issues, obesity, or being incarcerated, the investment or tax credit the government could offer this new classification of workers, we would get back in spades.
0:46:33 Doesn’t seem that hard, though, for companies just to be accommodating to women, because if your employee is a mother and they have a child, then, you know, have a conversation and make life easier for them.
0:46:41 Don’t keep them in the office until 9pm at night, and yeah, maybe if they need to take a day off work, let them take a day off work.
0:46:50 I don’t see why it needs to be such a huge structural thing to just accommodate people with children.
0:46:52 I mean, so that’s one part of this.
0:46:59 Second part of this for me is, I think this is exactly the right move to go back to the office.
0:47:13 And the reason I think that is related to a lot of what you talk about surrounding loneliness and isolation America, which to me is the number one problem that our society is facing right now.
0:47:19 Where you have half of Americans who say that they are struggling with their mental health as a result of their loneliness.
0:47:25 Among my generation, that number is 80%. You’ve got time spent with friends at an all-time low.
0:47:31 You’ve got one in 10 Americans saying they have zero friends, which is at an all-time high.
0:47:37 You’ve got the Surgeon General declaring a state of emergency about loneliness in this country.
0:47:49 But the idea that we’re promoting this generation, you’ve got whatever it is, half of my generation working remotely, doing their work from their laptops in their beds.
0:47:56 I know people who graduate a college and they work from their beds, they don’t get up and get dressed and put their clothes on.
0:48:01 They stay in their pajamas, they open up their laptop and they just lean back and do their job.
0:48:07 And then we’re wondering why are kids not motivated, why are they feeling isolated, why are they feeling lonely.
0:48:10 It’s like, get them in the fucking office.
0:48:20 So one of the kind of core characteristics or attributes of an autocrat is that when someone rises to power and becomes very popular,
0:48:26 the autocrat senses that they are a threat to them and they have them murdered.
0:48:30 I just felt that sensation with you.
0:48:34 You are now, Ed, you are now better at this shit than me.
0:48:41 Let me get this, people need to get in the office, loneliness, isolation and you’re much, I literally just suffer the moment.
0:48:47 Memo to self, must kill Ed, threat to dominance and power.
0:48:51 Anyways, I thought that was, I think you’re exactly right.
0:48:55 And I think the, I love that you’re saying this, I love you believe it.
0:48:57 I’m going to be redundant.
0:49:06 I think the biggest threat to America is one extremism on both sides of the political spectrum that no one wants to get along.
0:49:09 There’s no connective tissue around institutions to get us to get along.
0:49:16 It’s far, far right or far, far left and they all meet to agree on really heinous things.
0:49:25 And two, that people in isolation become not only unhappy, I’m sad for them, but men in isolation become dangerous.
0:49:29 They become prone to conspiracy theory, they become violent.
0:49:33 Women who become lonely, it’s no less a tragedy, but they don’t pick up AR-15s.
0:49:38 They are generally pretty good at finding other places to give and receive love.
0:49:53 But I find it just tragic when I’m meeting so many people in their 20s and 30s and I talk to them about, you know, working at home and they’re upset they can’t meet people and their expectations are so unreasonable.
0:50:00 I’m like, this person is just setting themselves up for kind of a life of incremental but increasing disappointment.
0:50:01 We need structure.
0:50:07 I think we thought when the pandemic happened that we’re all just kind of these floating islands, we can do whatever we want.
0:50:11 But I think it turns out that we actually need structure.
0:50:20 Sure, it’s kind of annoying if you’re standing by the cooler and you, you know, have to have a conversation with someone you don’t even know that well and whatever.
0:50:26 I mean, all of the annoying things of the office, sure, there are the downsides of the office.
0:50:31 But I mean, clearly we need these guardrails.
0:50:36 We need a system of getting up, doing the commute, interacting with other people.
0:50:37 It’s just something we need.
0:50:39 It’s hardwired into us.
0:50:43 I think the whole shooting match is relationships and mating.
0:50:51 And the most rewarding things in life, I think, are a function of your friendships, the colleagues you meet at work and who you decide to have kids with.
0:50:56 And let me be clear before the DEI people come for me or lawyers.
0:50:59 I can feel that they’re gearing up.
0:51:05 If you are above a certain seniority level in any company, your fly is up and locked, female or male.
0:51:09 You do not have sex with other employees, full stop.
0:51:19 Because the power dynamic creates too much risk for you, for the company, and quite frankly, for a situation where you put someone in a very uncomfortable position.
0:51:23 Above a certain level, VP or above, pick the level.
0:51:24 That’s it.
0:51:26 You take that shit off campus.
0:51:35 But below that, I have gone to, I don’t know, a dozen weddings of people who used to work at my firm.
0:51:36 And I’m always the last one to know.
0:51:37 I’m like, what, they’re seeing each other?
0:51:40 Like, yeah, they’ve been going out for two years.
0:51:42 And it’s a wonderful thing.
0:51:43 It’s a wonderful thing.
0:51:49 I’m pretty sure that you guys, the kids in our firm, pick that workspace because I’ve heard there’s a bunch of hot men there.
0:51:51 That’s just what I’ve heard.
0:51:52 That’s just what I’ve heard.
0:51:54 Claire, can you validate that?
0:51:55 Where’s our producer?
0:52:01 We need a Mia or Caroline to come on and comment for that one.
0:52:02 I’m sorry.
0:52:03 I’m a straight man.
0:52:08 We’re both looking at the same thing, Claire, but I can recognize, I can recognize hot men.
0:52:10 I can recognize hot men.
0:52:11 Way in here.
0:52:19 They are, yes, there are many hot men who all kind of look the same, very tech bro, kind of keep to themselves.
0:52:20 Very demure.
0:52:21 Very demure.
0:52:22 Yeah.
0:52:31 Anyways, I’m going to try and save this by saying that when people meet, 99% of the relationships that begin at work are consensual.
0:52:33 People, we need to err on the side.
0:52:35 I’m going to go totally off-script here.
0:52:37 You know what young people need to do?
0:52:40 Claire, Ed, you need to start fucking drinking more.
0:52:41 Not the two of you.
0:52:43 You’re in healthy relationships.
0:52:49 But all this shit from Peter Atia and the Huberman Lab talking about how bad alcohol is, they see drunkenness among young people.
0:52:50 You know what I see?
0:52:51 I see togetherness.
0:52:54 You guys need more reasons to bond.
0:53:00 You need more reasons to establish long-term camaraderie and affection for each other.
0:53:03 You need more confidence to kiss each other.
0:53:06 You need more, and all roads lead to alcohol.
0:53:11 Anything that can get people together.
0:53:13 I think alcohol gets people together.
0:53:15 And that’s why it’s good.
0:53:17 Christmas parties get people together.
0:53:19 The office gets people together.
0:53:27 And we’re spending nine hours of our waking hours every day at the office or doing our work.
0:53:31 You might as well just include some other people in that time.
0:53:36 All I will say to end here is nothing happens alone in your bedroom.
0:53:38 Nothing exciting happens.
0:53:42 Let’s take a look at the week ahead.
0:53:46 We’ll see data on the Personal Consumption Expenditures Index for August.
0:53:48 And we’ll also see earnings from Costco.
0:53:50 Scott, do you have any predictions for us?
0:53:52 I think Starlink is going to be hugely disruptive.
0:53:56 Okay, buy SpaceX stock.
0:53:58 I don’t think that’s the play here.
0:54:05 I think the play is there’s going to be a bunch of companies are going to get the shit kicked out of them.
0:54:12 So I did a search on companies offering some sort of wireless or broadband in the transportation sector.
0:54:14 So GoGo, which I hate.
0:54:15 I hate GoGo.
0:54:16 I literally hate it.
0:54:22 Viasat, MRSAT, KVH Industries, Iridium, SES.SA.
0:54:24 I don’t know what that is.
0:54:25 Utilstat.
0:54:26 God, these are terrible names.
0:54:27 Telestat.
0:54:33 I bet a basket of these eight companies, and I’d be curious what their performance is so far.
0:54:38 But I think when Starlink, when the word is out, they’re probably all in denial in the earnings call saying like McDonald’s.
0:54:39 Oh, it wasn’t GLP1.
0:54:41 It was inflation, which might be true.
0:54:48 But the moment these companies start coming out and saying that, yeah, Starlink is eating into our lunch.
0:54:56 And an analyst goes, well, is there any way you could shoot hundreds of satellites into the air and control 60% of the low Earth orbit?
0:55:00 And they’re going to realize, okay, there’s nothing we can do except try and slowly die here.
0:55:08 I think these companies are going to be the equivalent of, as I said, Paramount Global, Warner Brothers Discovery.
0:55:11 Name your company that’s getting the shit kicked out of it at the hand of Netflix.
0:55:16 SpaceX is to these companies what Netflix has done to the rest of the entertainment industry.
0:55:19 I think we need to try to secure you some advisory shares at SpaceX.
0:55:23 But you might have sort of botched your chances of that with the whole Elon ranting thing.
0:55:24 Yeah, I don’t think that’s going to happen.
0:55:26 Although I did meet his brother.
0:55:27 His brother came up to me.
0:55:29 He’s very tall, very handsome, his brother.
0:55:30 That’s a good idea.
0:55:31 Let’s cozy up to Kimball.
0:55:32 Yeah.
0:55:33 Let’s cozy up.
0:55:34 Is that his name?
0:55:35 Kimball.
0:55:36 Kendall Roy.
0:55:37 Kimball.
0:55:38 Kimball.
0:55:43 I went and I busted into my speech about SpaceX and he came in and said, thank you for saying nice things about SpaceX.
0:55:44 I’m like, is that you?
0:55:46 And he’s like, oh no, I’m Elon’s brother.
0:55:47 Awkward.
0:55:48 Awkward.
0:55:49 Awkward.
0:55:51 Anyways, read us out, Ed.
0:55:54 This episode was produced by Claire Miller and engineered by Benjamin Spencer.
0:55:56 Our associate producer is Alison Weiss.
0:55:58 Our executive producer is Catherine Dillon.
0:56:02 Mia Silverio is our research lead and Drew Burris is our technical director.
0:56:05 Thank you for listening to Proffdue Markets from the Vox Media Podcast Network.
0:56:10 If you liked what you heard, hit follow and leave us a review wherever you get your podcasts.
0:56:12 Live times.
0:56:34 You held me in kind reunion as the world turns.
0:56:54 I don’t need to be that good today because I’m looking especially handsome.
0:56:56 Jesus, hello ladies.
0:56:57 Hello.
0:56:58 Look at that.
0:56:59 That glow.
0:57:01 That London glow.
0:57:04 Where are you, Ed?
0:57:09 You look like you got a Norwegian family is adopted.
0:57:10 Where are you?
0:57:11 Looks very European.
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0:01:32 Today’s number, $3.2 billion.
0:01:37 That’s how much MLS teams have surged in value since Messi joined Miami.
0:01:38 I hate being from Florida.
0:01:41 I think it’s the most fucked up state.
0:01:44 “Hold my sister,” said Alabama.
0:01:46 Does that make any sense, Ed?
0:01:47 Does that make any sense?
0:01:48 Kind of.
0:01:49 Kind of.
0:01:50 Instead of, “Hold my beer,” “Hold my sister.”
0:01:51 It’s an incest joke, right?
0:01:52 Yeah.
0:01:54 You’re catching on.
0:01:56 Anyways.
0:01:58 The strong start.
0:01:59 Thanks for that, Ed.
0:02:00 It’s very supportive.
0:02:12 Welcome to Prop G Markets.
0:02:16 Today, we’re discussing Lionsgate Steel with an AI company.
0:02:17 Oh, my God.
0:02:19 The union hasn’t protected them from AI.
0:02:23 Anyways, and Amazon’s return to work policy.
0:02:27 I think the return to work policy has worked to your fucking hands drop off
0:02:33 because daddy needs a hotter chick with a tighter thong, said Jeffrey Bezos.
0:02:39 But first, here with the news is Prop G Media Analyst Ed Elson.
0:02:43 Ed, what is the Palabra Buena, which is what we would say in Miami?
0:02:44 Not much, Scott.
0:02:45 I’m doing well.
0:02:46 I’m live from Sweden.
0:02:47 I’m in Stockholm at the moment.
0:02:50 I just did a talk for a private equity firm.
0:02:52 So, I’m kind of living the baller Scott Galloway life.
0:02:53 Tell me about that.
0:02:54 What did you speak about?
0:02:58 I spoke about Gen Z and how companies can best engage with us
0:03:00 because we’re a very unusual generation.
0:03:02 Can we just give you a bunch of Molly and a mutt and tell the–
0:03:03 Anyway, what do we do?
0:03:05 What do we do to engage Gen Z?
0:03:07 Well, that was what it was all about.
0:03:08 You’re giving it all away.
0:03:09 I’m not going to tell you about it
0:03:11 because I need people to pay me to tell them about it.
0:03:15 I am curious, though, because to be serious for a second,
0:03:17 people talk about how entitled they are in Gen Z.
0:03:19 And what I’ve generally found on granted,
0:03:23 Catherine’s done a good job of finding these overeducated,
0:03:27 hardworking employees, also you guys.
0:03:29 I was waiting.
0:03:31 It couldn’t be a compliment.
0:03:33 I’m consistently being very truthful.
0:03:35 I think it’s total bullshit this notion
0:03:38 that you need to engage them or they’re entitled.
0:03:40 I have found, generally speaking,
0:03:42 that every generation gets more and more impressive.
0:03:45 And that’s true for the youngest generation of the workforce.
0:03:48 They’re generally more talented, more fast solid technology.
0:03:52 In some, I think corporate America and especially my firms,
0:03:56 the information economy firms, run on the youngest generation
0:03:58 because they generally don’t have kids
0:04:00 so they can devote a ton of time to work.
0:04:03 The ambitious ones want to do nothing but work
0:04:05 because they want to get ahead.
0:04:07 They’re very in touch with technology.
0:04:10 And quite frankly, they’re just not asking for paternity
0:04:12 or maternity leave yet.
0:04:14 And they’re not thinking about these odd things in life
0:04:15 called balance.
0:04:17 They’re willing to work their asses off to try and establish
0:04:19 some currency in the professional market.
0:04:22 I think America runs on young people.
0:04:25 Yeah, I mean, I agree America runs on young people,
0:04:26 but I think you’re a little biased
0:04:28 because I think you’ve been surrounded by people
0:04:30 and you’ve created a culture where people are willing
0:04:31 to work very hard.
0:04:35 But no, I think young people have very high expectations
0:04:37 about what they want as employees.
0:04:41 And also a lot of my talk wasn’t necessarily about
0:04:43 hiring and employing young people
0:04:46 but also trying to sell to them
0:04:47 and how to capture their attention.
0:04:50 I think that in the age of social media
0:04:52 where you have billions of different voices,
0:04:53 billions of different companies
0:04:56 all competing for our attention,
0:04:58 I think companies are in a place
0:05:00 that they haven’t really had to deal with before
0:05:03 where they’re struggling to capture our attention
0:05:05 and engage it in a meaningful way.
0:05:07 Were you nervous before the gig?
0:05:08 Never.
0:05:09 Really?
0:05:10 I was extremely nervous.
0:05:12 One and a half percent of the time I speak,
0:05:13 I get a panic attack.
0:05:14 Oh yeah?
0:05:15 I just sort of blacked out during it.
0:05:18 I think I’d prepped enough where it wasn’t really
0:05:20 an issue for me and I kind of just,
0:05:24 my brain wasn’t even operating while I was speaking.
0:05:26 How does it work out for you?
0:05:29 Mine is more, I don’t know, just random.
0:05:31 It could happen in small groups or big groups.
0:05:33 I haven’t been able to figure out why it happens.
0:05:36 The only thing I could figure out is when I’m severely jet lagged,
0:05:38 sometimes I have a panic attack.
0:05:41 And for a while, right away,
0:05:43 the first time I went on Bill Maher,
0:05:46 in situations where I’m worried about it,
0:05:48 and I’m not proud of this, I’ll slam a beer.
0:05:51 Right before, because I’ve noticed before you do your speaking gigs,
0:05:54 I notice you go out the night before.
0:05:57 But maybe that’s just because you always go out and drink anyway.
0:06:00 Yeah, that’s just because it’s a night.
0:06:02 That’s not a strategy.
0:06:04 That’s just because I’m in a strange city and I want to find out
0:06:07 if there’s hot people who like alcohol and are going to be impressed by me
0:06:12 because I’m speaking at some National Cotton Growers Association the next day.
0:06:15 Because I was thinking maybe you liked being hungover or something,
0:06:17 that it sort of calms you down.
0:06:19 Oh yeah, that’s a ton of fun.
0:06:22 It’s great to walk around like you just went through your third battery, a chemo.
0:06:24 Anyways, get to the fucking headlines, Ed.
0:06:27 Let’s do it. Let’s start with our weekly review of Market Vitals.
0:06:33 The S&P 500 rose.
0:06:36 The dollar drops to a low for the year.
0:06:39 Bitcoin climbed and the yield on tenure treasuries increased.
0:06:41 Shifting to the headlines.
0:06:44 The Federal Reserve cut interest rates for the first time in four years
0:06:46 by 50 basis points.
0:06:49 That was double what most economists had predicted.
0:06:51 Markets initially surged following the announcement,
0:06:54 but the three major indices ended the day lower.
0:06:58 United will soon offer free Wi-Fi in more than 1,000 planes
0:07:02 after reaching a deal with SpaceX to install Starlink on its entire fleet.
0:07:05 This is Starlink’s biggest in-flight connectivity deal yet,
0:07:09 and it will bring its total aircrafts under contract to $2,500.
0:07:13 BlackRock and Microsoft are launching a $30 billion fund
0:07:16 to invest in AI infrastructure.
0:07:19 The Global AI Infrastructure Investment Partnership
0:07:22 will build more data centers to meet the growing energy demands
0:07:24 from gen AI and cloud computing.
0:07:28 And finally, Instagram is putting users under the age of 18
0:07:31 into teen accounts, which will be private by default.
0:07:35 The platform will also use AI to help verify a teenager’s age.
0:07:38 The teen accounts will immediately begin rolling out in the US,
0:07:41 Canada and the UK, and they will eventually expand
0:07:43 across all of Meta’s platforms.
0:07:46 Scott, your thoughts beginning with the rate cut.
0:07:51 I think the most consequential person of the last several years.
0:07:54 Yeah, is that true? Putin or Trump probably or Biden?
0:07:58 Okay, like one of the most consequential people has been Chairman Powell.
0:08:02 And he pulled off sort of the impossible and it looks like we’ve had
0:08:07 the kind of consummate, you know, Simone Biles stick to landing soft landing.
0:08:11 And that is a soft landing is meant to cool the economy when you have inflation
0:08:14 while not nudging it into recession.
0:08:16 And it looks as if he’s pulled that off.
0:08:18 We’re beginning a rate cutting cycle.
0:08:23 What was unusual was coming in with kind of a hammer with a 50 BIP reduction.
0:08:28 It’s usually 25 and they usually don’t do that unless they’re worried about a recession.
0:08:30 But we’ve seen unemployment tick up.
0:08:34 And at the same time, inflation is now almost at its target rate.
0:08:39 So, you know, this guy’s just shown kind of like ninja like capability here.
0:08:43 And now they’re thinking that maybe the unintended consequences
0:08:48 of these exceptionally high interest rates that kept people nailed to their home
0:08:52 where they kind of had this, you know, unexploded devices in the home
0:08:55 called a mortgage 2.5% where you couldn’t move.
0:09:00 That there’s all this pent up demand of people who want to move back closer to the family,
0:09:03 you know, debt, disease, divorce, want to sell their home,
0:09:05 but haven’t because they didn’t want to give up that mortgage.
0:09:09 But if mortgage rates do come down substantially,
0:09:14 it’s going to free up a ton of supply in the housing market among the nonmovers
0:09:18 who are willing to give up, you know, 200 BIPs for a worse mortgage
0:09:22 and that additional supply will actually bring housing down.
0:09:26 So for me, the most interesting thing about all of this will be housing,
0:09:28 but the market seemed to like it.
0:09:32 Typically after we start a rate cutting cycle, the market goes up 12% to 14%,
0:09:35 but kind of all bets are off here.
0:09:40 And you know, we’ve seen the dollar come down, which makes sense given that interest rates are coming down,
0:09:46 but in general, you know, I just think it’s hilarious that everybody who’s either watched a commercial
0:09:50 or seen a logo thinks they’re an expert in advertising or design or has a kid in school
0:09:54 and thinks they’re all of a sudden an education expert than anyone that has ever spent money
0:09:56 has a view on what chairman Powell should do.
0:09:58 So what do I think he should do?
0:10:02 I think he should do whatever the fuck he thinks we should do because the guy has put on a masterclass.
0:10:03 What are your thoughts?
0:10:05 I was going to say that exact same thing.
0:10:12 I mean, I have read and heard and seen a million different hot takes from podcasters
0:10:17 and political commentators and people at cocktail parties on what the Fed should do.
0:10:22 Everyone has their own opinion on what the correct monetary policy for the US is,
0:10:29 but there is one guy who is best positioned to have a good hot take on monetary policy.
0:10:34 There’s a guy who’s got the most experience, expertise, the best access to data.
0:10:37 He has everything and it’s Jerome Powell.
0:10:38 It’s the guy in charge.
0:10:42 So I don’t have a take and nor should anyone else.
0:10:44 The only guy who should have a take is Jerome Powell.
0:10:45 I agree.
0:10:46 Should we talk about Starlink?
0:10:47 Yeah.
0:10:50 So I don’t know if you’ve sensed this, but I’m actually not an enormous fan of Elon Musk.
0:10:51 Really?
0:10:54 But I just, I don’t think there’s any getting around it.
0:10:57 I think Starlink is going to be the technology of 2025.
0:10:58 I think this thing is amazing.
0:11:03 I mean, effectively, all strategy comes down to clearing three hurdles.
0:11:07 The first is, is your product or your service truly differentiated?
0:11:12 And it doesn’t have to even have product differentiation, but otherwise if it doesn’t have product differentiation,
0:11:17 you’ve got to inculcate emotional or cement emotional association such that people think,
0:11:21 “Oh, I feel better wearing a Panerai even though it tells the same time as anywhere else
0:11:26 because they’ve convinced me that it was Italian submariners and I feel more Italian and masculine.”
0:11:33 You have to honestly say, does this strategy clear the hurdle of differentiation from our competitive set?
0:11:35 If you do that too, relevance.
0:11:37 Does anyone care about a differentiation?
0:11:42 Back in the 2000s, I was asked to work on this brand strategy for the Haas School of Business,
0:11:44 which is Berkeley’s graduate school.
0:11:47 And they were thinking about becoming the internet business school.
0:11:49 And I said, “Well, it’s definitely differentiated.
0:11:52 The problem is for how long will it be relevant?
0:11:58 Will there be a new technology yet to be determined that makes a focus on the internet irrelevant?”
0:12:01 And the thing about differentiation and relevance are the two hurdles.
0:12:03 Is there a national conflict with each other?
0:12:06 And that is, Kleenex is highly relevant to people.
0:12:08 It’s very hard to differentiate.
0:12:11 Ferrari is highly differentiated, not that relevant.
0:12:15 Most people are never going to be in the market for a $450,000 car.
0:12:21 If you manage to find something that’s both differentiated or build something that’s both differentiated and relevant to consumers,
0:12:25 then you got to focus on, all right, sharks are going to come for us.
0:12:27 Megalodons are going to come for us.
0:12:29 Competitors are going to come for our lunch.
0:12:34 What modes can we put up such that our differentiation and relevance is sustainable?
0:12:36 Differentiation, relevant sustainability.
0:12:40 Now, the differentiation here is tangible.
0:12:45 I can get a call from my son in the middle of a commercial flight on FaceTime,
0:12:47 and it is crystal clear, perfect.
0:12:51 They’re sitting there eating bad lamb, signing up for go-go fucking wireless eight times.
0:12:55 I’m wondering if I’m going to get eight charges for $19.95.
0:12:58 This product is highly differentiated.
0:12:59 It’s relevant.
0:13:03 Energy and broadband, we never have enough.
0:13:08 The world’s appetite for energy and broadband and bandwidth is never sated.
0:13:14 There’s always new applications and new ways to use, you know, wind energy, nuclear energy, fossil fuel energy, whatever it is.
0:13:19 There’s always the new apps that come out will always absorb all the bandwidth
0:13:22 and processing power we can produce.
0:13:29 And then the thing that just blows my fucking mind here is they control two-thirds of the low-orbit satellites,
0:13:34 and they have this infrastructure called SpaceX that has revolutionized space hauling,
0:13:44 or specifically, it can get shit into space satellites for much less money than NASA or any other space hauling company.
0:13:48 So all three of these things just add up to just disco.
0:13:54 Now, the company’s trading at about a quarter of a trillion-dollar market cap in the private market,
0:13:58 so word is out about how well these guys are doing.
0:14:04 They’ll do about 13 billion this year in revenues, meaning that its most recent valuation of 210 billion,
0:14:08 that it trades at about double the price-to-sales ratio of Tesla.
0:14:14 We predicted a couple years ago that we thought SpaceX was going to be worth more than Tesla,
0:14:16 but I think this thing is just amazing.
0:14:22 Well, you have to remember is that Starlink is a one part of the SpaceX business.
0:14:29 It’s estimated that Starlink is going to generate this year $6.6 billion in revenue.
0:14:34 And just to put that into context, OpenAI, which is the hardest startup in the world,
0:14:39 their expected revenue for 2024 is $3.4 billion.
0:14:46 So just Starlink alone has basically doubled the business of OpenAI,
0:14:50 and that doesn’t even include all the rest of it that SpaceX is engaged with.
0:14:57 Yeah, I think this is an incredible company, and that giant valuation premium that you’re seeing,
0:15:00 I think in this case is totally warranted.
0:15:10 I mean, what companies other than Big Tech control 60% to 70% of a market,
0:15:14 and it’s not a niche market, this is a market that we all will depend on.
0:15:18 I’m also very excited to try it out because I’ve heard a lot about it from you,
0:15:23 from people who own yachts or have chartered planes.
0:15:27 For some reason, that’s the only place that Starlink seems to exist.
0:15:30 So I’m excited for them to bring it to the masses with United.
0:15:32 Shall we talk about BlackRock and Microsoft?
0:15:38 Yeah, so my initial reaction is that Microsoft should be in the business of AI infrastructure,
0:15:43 but at the same time, they are now the most successful corporate venture firm in history
0:15:45 with their investment in OpenAI.
0:15:51 So I can not based on the increase in valuation of what is supposedly 150 billion that OpenAI
0:15:55 is supposedly raising money at, but because of what it’s done to Microsoft stock.
0:15:58 So I can see why they would do this.
0:16:03 Everybody is talking about AI infrastructure specifically trying to create some form,
0:16:08 or trying to create the, not only put in place the processing power, but the power generation.
0:16:13 One ChatGBT request requires 10 times the energy of a Google search.
0:16:20 This is a big issue, not only for societies, but these organizations now say that choke point
0:16:25 around progress around AI and our ability to offer better AI applications,
0:16:32 the choke point, the friction point, as we map out the supply chain, might be just straight energy.
0:16:36 And they’re thinking, okay, maybe we control the infrastructure and the energy.
0:16:38 And there’s a bit of a lesson here.
0:16:44 And that is, I think it’s really helpful and fruitful for entrepreneurs to say, okay, I’m in the business.
0:16:48 I don’t care what it is, a taco truck, or I’m starting a consulting firm.
0:16:53 Map out literally from, not from birth, but who is your customer?
0:16:58 How is that customer even developing a need for your product?
0:17:00 What situation, what emotional state?
0:17:01 Where do they learn about it?
0:17:03 Where do they intend to buy it?
0:17:04 How do they buy it?
0:17:05 How do they consume it?
0:17:07 What is the consumption process like?
0:17:09 What works, what doesn’t work?
0:17:12 How do they feel about the product and the brand after?
0:17:17 Just literally map out the entire customer journey and then start saying, and VCs call it pain points.
0:17:19 They call it friction points.
0:17:21 What is the friction in the business?
0:17:24 And that’s one of the first things I ask anyone who’s asking me for money.
0:17:26 I say to them, what is the friction in the business?
0:17:28 And I say, what do you mean by that?
0:17:38 If you could have 10 super talented people right now, or $10 million in fresh capital, or 10 fantastic, huge clients, what would you rather have?
0:17:39 What’s the friction in the business?
0:17:42 Is it clients, is it capital, is it people?
0:17:49 Because a lot of people don’t, entrepreneurs just sort of think it’ll naturally come to them, but really think through, what are the friction points?
0:17:56 And the reason I’m bringing this up in this context is I believe that a lot of these companies are now seeing not just GPUs.
0:18:01 There’s enough companies coming for Nvidia’s launch, including TSMC.
0:18:06 I think Meta announced it’s going to start designing its own AI chips.
0:18:11 I think the companies look at power and energy and think this could be a big problem.
0:18:12 What are your thoughts on?
0:18:15 Yeah, I think energy is the story here.
0:18:18 That’s why utilities have been the best performing sector of the year so far.
0:18:25 Utility stocks have been outperforming tech stocks because everyone’s realizing if AI is coming,
0:18:28 then we’re going to need three times more energy than we produced today.
0:18:34 I mean, data center energy demand is expected to triple by 2030.
0:18:36 I think most people are understanding that.
0:18:39 I think we’re seeing sort of a re-embrace of fossil fuels.
0:18:45 I mean, the most telling thing was the fact that Kamala Harris in the presidential debate bragged about domestic oil production.
0:18:49 You would have never seen a Democrat doing that a few years ago.
0:18:54 But the other thing people do need to keep in mind is that fossil fuels aren’t even going to be enough.
0:18:56 We’re also going to need renewables.
0:19:03 So any entrepreneur who’s innovating in the energy space right now, who’s figuring out a way to just create more energy,
0:19:06 those are the entrepreneurs that I would want to bet on.
0:19:12 One other observation about the fact that we’ve got Microsoft partnering with BlackRock,
0:19:14 and this is a $30 billion fund.
0:19:22 That’s going to be raised through equity investments, but they’re also supposedly going to raise another $70 billion in debt.
0:19:26 So what you have is Microsoft teaming up with BlackRock,
0:19:32 the largest asset management firm in the world, to manage $100 billion in AI investments.
0:19:36 And I look through kind of the history of the most enduring businesses.
0:19:40 Like, you know, you look at the banks, for example, Wells Fargo.
0:19:42 This was a shipping business.
0:19:45 They were in the business of transporting gold.
0:19:49 And over time, they accumulated assets and they offer other things too.
0:19:51 But ultimately, it’s asset management.
0:19:56 And you look at Lehman Brothers, it was a similar thing, except it was shipping cotton.
0:20:02 And so my theory is that if you want to be a company that lost hundreds of years,
0:20:06 ultimately, you’re going to have to get into the asset management business.
0:20:12 You’re going to have to switch from being a company that makes things to a company that owns things.
0:20:15 And if you look at what Microsoft has been doing in the past year,
0:20:23 I feel like Microsoft is laying the groundwork to eventually become just an asset management firm.
0:20:28 And it feels like if you want to buck Aswath Damodaran’s corporate life cycle,
0:20:33 you do have to turn into a zombie, which basically just means you just need to own as much shit as possible.
0:20:35 And that’s how you generate your return.
0:20:36 I think it’s really interesting.
0:20:40 And I was thinking about my first reaction was, no, that’s not true.
0:20:46 The companies that have created hundreds of billions, if not trains of dollars in value over the last 20 or 30 years
0:20:48 are these young companies that are asset-like.
0:20:53 But your point is, okay, fine, but those companies are also really vulnerable
0:20:58 because it’s essentially a thick layer of software off of some consumer trend or some IP
0:21:00 that’s very hard to defend over the long term.
0:21:08 And the companies that have staying power sit on hundreds of billions of dollars in insurance, Berkshire Hathaway,
0:21:15 or own the bank or own the utility or whatever it is and just sort of clip coupons.
0:21:19 And while it’s lower growth and it kind of plays into Aswath’s thing is that
0:21:25 biology is impossible to ignore even in business, that you don’t stay a teenager for very long.
0:21:27 And eventually you got to realize, okay, I’m a baby boomer now.
0:21:31 And my job is not, if you will, to kind of work hard or innovate or be creative.
0:21:33 It’s to own shit.
0:21:36 And I think that’s really interesting.
0:21:42 The question I have is, did you try that theory out on any of the unsuspecting Swedish ladies
0:21:44 down at that cheap hotel bar last night?
0:21:49 And then they’d say, oh no, my reindeer’s here to take me to Fondue.
0:21:52 Why does that make me happy?
0:21:54 Why does that make me?
0:21:59 Is that a hate crime to categorize and stereotype Swedish is riding reindeer and eating fondue?
0:22:01 That’s what’s going to really offend people.
0:22:07 Let’s move on to Instagram and this new age-gating policy.
0:22:13 I mean, you’ve been calling this, you’ve been calling for this for years.
0:22:20 I assume this isn’t exactly what you were hoping for, but what are your reactions to Instagram?
0:22:22 Finally, slightly listening to Scott Galloway.
0:22:27 Well, okay, so Adam Massari seems like a lovely guy and he’s the new Sheryl Sandberg.
0:22:29 They’re like, oh, people think you’re lovely and you sound sincere.
0:22:33 So let’s use you as our heat shield so we can keep acting like Mendacious Fox.
0:22:39 And both the alcohol and tobacco industries on the eve of legislation would say, oh no, we’re self-regulating
0:22:42 and you don’t need to do this because look what we’re doing to ourselves.
0:22:49 And their whole go-to through all of this, through the suicide, the self-harming, the election misinformation
0:22:53 was to say these issues would just be too complex to solve.
0:22:59 And then what do you know? They figured out pretty easily that they can tell using AI when someone is under the age of 16
0:23:04 and they send them a prompt saying, we need you to give us your age.
0:23:07 And if they looks as if they’re lying and they can perceive that pretty easily,
0:23:10 they ask you to upload a federally issued identification.
0:23:12 No must, no fuss, pretty fucking easy.
0:23:19 But the geniuses couldn’t figure it out until the Children’s Online Safety Act was about to be passed.
0:23:25 So look, great, I hope they do it. Kudos to Adam, but be clear.
0:23:28 These people are Mendacious Fox.
0:23:36 They are only doing this as a prophylactic such that they stave off regulation which is now imminent.
0:23:38 So great, I hope they do it.
0:23:42 It would be a nice start for the bad folks at Metta.
0:23:49 But this should not in any way curtail the legislation or slow it that is required.
0:23:53 Because when we call on the better angels of these companies, they do not show up.
0:23:57 So great, great, they’re doing it fine.
0:24:04 Don’t believe it, assume they are not genuine about it and make sure we have legislation. We need laws.
0:24:08 We’ll be right back after the break with a look at AI in Hollywood.
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0:25:23 Aid Sleep is revolutionizing the way we sleep with what they call the pod.
0:25:30 You can add the pod to your current mattress like a fitted sheet to automatically cool down or warm up each side of your bed.
0:25:34 They’ve just launched the newest generation of the pod, the Pod 4 Ultra.
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0:25:49 What do you think, Ed? Tell us about your experience with the pod.
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0:27:33 Film Studio Lionsgate has struck a deal with a startup called Runway to create a custom AI model for production and editing.
0:27:37 This is the first partnership of its kind between a major studio and an AI company.
0:27:42 Runway will train the model on Lionsgate’s cast log of more than 20,000 film and TV properties.
0:27:48 Initially, they plan to use it to develop storyboards, but eventually it’ll be used for backgrounds and special effects.
0:27:54 According to the vice chairman of Lionsgate, the model will save the studio, quote, “millions and millions of dollars.”
0:28:00 Scott, Gen AI was a huge point of concern during the right to strike.
0:28:06 We’ve talked about it a little bit before. What do you make of this deal in light of that conflict?
0:28:17 So what happened with, I think, the way I would assess the right to strike is that the atmospherics were such that the creative community was just losing a ton of leverage.
0:28:22 Because it had grown too fast. They had a sugar high from the out of control kind of content wars.
0:28:29 It was slowing down. It was rationalizing. So the oxygen was coming out of the room and the right to scale decided to strike at exactly the wrong moment.
0:28:34 Providing them with a multilateral force pause and spending, which was a gift to them.
0:28:37 And so it was like they had no negotiating leverage.
0:28:44 And so after five months, when they took their members and said, “We want you to make no money for five months, such that we can go get you a 5% increase in salary,”
0:28:49 which barely covered the inflation that was registered during the time they were out making zero money.
0:28:57 And I’m pretty sure they sat down with the studios and said, “Okay, can you put in some language such that we can pretend we got some protection around AI?”
0:29:08 And a language was literally like the studios agreed to discuss any use of AI. It’s like, “Okay, bitch, we’ve discussed it. Now welcome to your AI twin.”
0:29:12 And there’s some things in there that were always illegal.
0:29:23 Yeah, it basically said, you can use AI, but we have to receive credit and compensation if our work was used as an input. That was federal law.
0:29:32 Yeah, so it’s like saying to them, “I remember when I was in business school in my second year, we actually had a professor saying, ‘You’re not allowed to use spell check.'”
0:29:36 I’m like, “What? Not allowed to use spell check? What do you mean?”
0:29:44 I mean, or there was a big movement among teachers not to let kids use calculators in class in the ’70s.
0:29:51 There’s no putting the genie back in the bottle here. The good news for creators is I’m about to go into a writer’s room at, I don’t know if you’ve heard of,
0:29:57 sold an original scripted drama to Netflix that was “Bot in the Room,” which is “Lingo for I rock the fucking house.”
0:30:02 “Bought in the room.” As in, you went in, you pitched it, and they bought it.
0:30:08 Oh, and you clearly don’t understand the machinations, the inner workings of Hollywood. I didn’t know it either, actually.
0:30:19 There’s a term called “Bot in the Room,” and our pitch was “Bot in the Room.” And it was absolutely my incredible insight, not Rosamund Pike reading the script.
0:30:27 I could watch her read the phone book, by the way. Literally, I saw these people just sitting there like they were being like a baby in a lullaby when she started reading.
0:30:35 Anyways, the good news for creators, I’m using AI a lot. I think of myself as a creator. It’s an amazing partner.
0:30:40 Just as Google was an amazing resource, this has just taken it to a new level.
0:30:52 So what I do think it’ll have a bigger impact on, though, is some of the infrastructure around storyboards. I mean, just as a green screen, probably reduce production costs, because we don’t need to go to Antarctica to film the scene.
0:31:02 You think that’s only going to get better and better and better. I think the thing that is going to hurt this industry more than AI, which always has a kind of a boogeyman factor to it.
0:31:14 Technology feels scarier because these people don’t understand it. It’s some really boring shit, and that is it is cheaper to produce films now in Albuquerque, New Mexico, Dublin, Ireland, Seoul, Korea, and Madrid than it is in Los Angeles.
0:31:26 And it’s essentially just as it became easier to produce a world-class car in Japan and South Korea than, I guess, China to a certain extent. The same thing’s happening to Hollywood.
0:31:33 It’s really interesting. Hollywood’s becoming Detroit, and they’re going to blame AI because they don’t understand it, and it sounds more spooky and scary.
0:31:43 The cost reductions and threats of AI will be incremental. The thing that is going to kick the shit out of Hollywood, and I think already is, is just globalization and outsourcing to other nations.
0:31:52 Yeah. I mean, I think this whole headline is basically just a giant victory lap for us, mostly you, but…
0:31:57 You’re sounding like Sarah Swisher. We were right. And I was right.
0:32:07 Let me just point out that something I think people forget is that the original demand of the writers was that you’re not allowed to use AI.
0:32:08 Look at that.
0:32:14 They literally said to the production studios, “You’re not allowed to use it. That’s our demand.” And the studio said, “No.”
0:32:25 And then they came back a few months later, and as we pointed out, they said, “Okay, you can use it, but you need to credit us,” which, as we have discussed, was not a win because that was already federal law.
0:32:29 So they lost five months of pay to achieve nothing, basically.
0:32:39 And the reason I want to point out the victory lap is because everyone said that they won. Everyone said it was a victory for the writers.
0:32:53 I have some headlines here from Jacobin magazine, quote, “Hollywood writers score historic victory.” Here’s an article from The Guardian, “How Hollywood writers triumphed over AI and why it matters.”
0:33:02 And there was, I mean, you were getting a lot of shit from a lot of people for saying, “Look, I think this is a shitty deal, and the writers have not won.”
0:33:11 I mean, you were predicting they wouldn’t win, and we looked at the agreement with the WGA set with the production companies, and it was a shitty deal.
0:33:22 And here we are a year later, and there is a headline saying that one of the biggest production companies is going to partner with an AI company to do all of its graphics and its storyboarding.
0:33:26 And obviously, it’s not going to just be storyboarding. That’s what they’re saying right now.
0:33:35 It’s going to transition to editing, and then to production, and then to writing. It’s going to keep on snowballing until, yeah, we don’t need set designers.
0:33:43 We don’t need makeup artists. We don’t need graphics editors, et cetera, et cetera. This is clearly the beginning of the end for Hollywood.
0:33:51 Box office sales are down 10% this year. That’s expected. The cinema is dying. Theatre attendance down 40% in the past decade, also expected.
0:34:03 Film and TV production down 40% this year, and unemployment in Hollywood is 13%, which is triple the national average.
0:34:14 To transition out of this run, what I would ask of you is you’ve probably got a lot of people in Hollywood who don’t like you, except for your friends who are in the writers’ room with you and Rosamund Pike.
0:34:22 But there are a lot of people in Hollywood who probably think, “Fuck that guy, Scott Galloway, who seems to be preying on our downfall.” That’s not what you’re doing.
0:34:34 But what would be your advice to someone in Hollywood, call it a makeup artist, who might be listening to this podcast right now, and needs to figure out something?
0:34:43 They’ve got to change something, because you cannot just expect the WGA or your union to figure it out for you. What would be your advice to those people?
0:34:53 The question you just asked me is the question, I track all my inbound emails, and the number one inbound email used to be, “Is it too late to find video?”
0:35:05 But by far, if I looked over the last five years, what is essentially the subject of queries I get in my email inbox, and it’s, “What should I do? Is it too late for me to transition out?”
0:35:15 And the reality is that there’s no silver bullet, and it’s very situational. What I think the process for trying to figure it out is to say, “All right, what are my advantages?”
0:35:27 And if you’re young, one of your big advantages is your mobility. So if you think about what’s happening to the creative community, it’s not that it’s going away.
0:35:38 It’s that it’s being disrupted and going to a lower cost producer. So content spend is still growing. Content is up 2% this year, but it’s growing outside of the U.S.
0:35:49 This year, Netflix’s international content spend will surpass U.S. spending for the first time. Why? Because producing squid games in South Korea was 10 times cheaper than producing stranger things in the U.S.
0:35:56 Content spend through 2028 will decline over 20% in North America and grow in South America, Africa, Eastern Europe, and Asia.
0:36:08 So this sounds very basic, but the first question I’d ask is, “If you’re in LA and having trouble paying $3,500 through your one-bedroom apartment, are you mobile?”
0:36:18 Because that’s an advantage. Because if you’re mobile and you’re talented, I would think really thoughtfully around, “Where is the economy in the creator economy growing?”
0:36:26 And why wouldn’t you move? Because a lot of us can’t. Once you have kids and dogs, it gets harder and harder to move. So the first is leaning into your strength, your mobility.
0:36:31 Well, they’re all that because they want to hang out at the shots of my mom and they want to go to the bungalows.
0:36:40 I 100% get that. But they have beer and Dublin and I heard Albuquerque. Well, I don’t know. I don’t know. I’ve only been to South Korea once.
0:36:50 So this is going to sound past A. Lean into how American you are. And that is America started out as an agrarian society.
0:36:58 We had huge crops, huge natural resources. Then we moved to a manufacturing economy and we were the best in the world.
0:37:03 Then when other places, it started getting outsourced to lower cost manufacturers, we became a services economy.
0:37:07 We had the best M&A law firms and investment banks and consulting firms.
0:37:16 And then we became essentially technologies now, the tail wagging the dog. We are the most agile society that’s ever been created.
0:37:24 Now, we have a lot of built-in advantages in terms of friendly candidate of the north, harmless Mexico to the south, oceans protecting us from everyone.
0:37:28 We have more natural resources than anyone. We are blessed a lot.
0:37:33 But our agility is really what has continued to make us the economic miracle.
0:37:42 And ask yourself, how can I be as agile as possible? How do I create a clean slate of where I need to be?
0:37:53 And also, what I will say about your generation, I was with a group of people in New York last time I was there and this woman was working in interior design.
0:37:57 And she said, “It’s just so expensive here.” I’m like, “Well, you have to mind New York.”
0:38:01 And she literally looked at me and she’s like, “I think I’d kill myself if I had to leave New York.”
0:38:13 You realize that there’s 7.5 billion people and 7.499 are reasonably happy not living here.
0:38:26 And it feels as if, and I’m becoming a boomer, I do meet a lot of young people that are under the impression the world owes them the ability to live in New York or LA.
0:38:27 That’s right.
0:38:35 And, okay, get past that. There’s a lot of people who are really happy, are really happy in St. Louis.
0:38:44 And figuring out a way to write software manuals, which might sound awful, but they can do it from their house and they have nice homes and nice families.
0:38:47 And they’re doing just fine and they live a nice life.
0:38:54 But what is it, lean into your strength? It’s your strength, your flexibility, your agility, get a group of people who can help you.
0:38:56 Don’t be afraid to ask for help.
0:39:04 A lot of young people, especially in this Instagram generation, want to pretend that their life is just fucking Dom Perignon and Gulf Streams and are embarrassed to ask people for help.
0:39:08 Like, “Oh my God, I don’t know how I’m going to make a living. I need help.”
0:39:12 Greatness is in the agency of others. It is really hard to read the label from inside of the bottle.
0:39:14 Find people who can advise you.
0:39:18 Recognize if you have to leave LA or New York, you’re going to be just fine.
0:39:28 The majority of people have done it and recognize it might be what they say when God closes a window, we open the door.
0:39:30 Also, the Boeing CEO said that, Ed.
0:39:32 But, get it?
0:39:38 I must go find my reindeer and go get fondue. Please leave me alone.
0:39:41 Unattractive, unattractive man from Brooklyn.
0:39:45 I don’t care what you are telling the national cotton growers of Northern Europe about.
0:39:52 We’ll be right back after the break with a look at Amazon’s new return to work policy.
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0:43:15 [Music]
0:43:18 We’re back with ProfG Markets.
0:43:22 Amazon is calling its employees back to the office five days a week.
0:43:26 That’s a step change from its current three-day-a-week policy, which will expire at the end of the year.
0:43:31 In a memo to staff explaining the reasoning for the new policy, CEO Andy Jassy wrote,
0:43:36 “Keeping your culture strong is not a birthright. You have to work at it all the time.
0:43:44 When we look back over the last five years, we continue to believe that the advantages of being together in the office are significant.”
0:43:47 Scott, what do you make of this strategy?
0:43:51 Look, I think that it doesn’t surprise me.
0:43:56 The really unusual or the most enduring thing about COVID, or the most enduring structural shift,
0:44:04 is the intersection between human and financial capital, which is basically a fancy way of saying remote work is probably the biggest structural change.
0:44:11 Amazon gets to dictate the terms of their employment or employees, and if people don’t like it, they can find another job.
0:44:20 Where I think it’s tough, and our producer, Claire, pointed this out, is that they might lose a lot of mothers or new mothers,
0:44:27 where women are always going to bear a greater share of whatever you would want to call it, care.
0:44:36 And that’s not fair, and I salute people, couples, for sharing the work equally, and we shouldn’t expect that to be the case.
0:44:39 But it is the case, and it will be for a long time.
0:44:46 So how does the corporate world respond to the notion that they’ve done a great job elevating women who aren’t married and not having kids?
0:44:54 Single women under the age of 30 are now earning as much or more than men, and they should because they’re seeking tertiary education at greater ratios,
0:45:04 so they should make more money. But what do we do about the kind of stagnant problem of women once they decide to leverage their ovaries that go to 73 cents on the dollar?
0:45:13 The real kind of miss or dysfunction in corporate America is still how do you maintain and engage mothers?
0:45:18 How do you maintain their career trajectory? How do you keep them engaged at work without making their life just fucking impossible?
0:45:29 Well, we basically say to women who want to be successful in terms of the corporate world, and also as is the case in, I think, 60, 80, 90% of families will burden a disproportionate amount of the work.
0:45:35 The answer isn’t just to say, well, men should do more work at home. Okay, good luck with that, and Facebook should be nicer people.
0:45:41 What we need, in my opinion, is a new classification of worker that is called the care worker.
0:45:53 You have kids, you’re taking care of an elderly parent, you have a different set of rights, or the company says we’re care worker friendly and says we’re going to make accommodations for you.
0:46:09 We’re going to figure out a way that you can work remotely one or more days a week, and we’re going to do our best to maintain your income trajectory because the nation will pay one way or another if we have a lack of care at home,
0:46:21 whether it’s kids ending up with mental health issues, obesity, or being incarcerated, the investment or tax credit the government could offer this new classification of workers, we would get back in spades.
0:46:33 Doesn’t seem that hard, though, for companies just to be accommodating to women, because if your employee is a mother and they have a child, then, you know, have a conversation and make life easier for them.
0:46:41 Don’t keep them in the office until 9pm at night, and yeah, maybe if they need to take a day off work, let them take a day off work.
0:46:50 I don’t see why it needs to be such a huge structural thing to just accommodate people with children.
0:46:52 I mean, so that’s one part of this.
0:46:59 Second part of this for me is, I think this is exactly the right move to go back to the office.
0:47:13 And the reason I think that is related to a lot of what you talk about surrounding loneliness and isolation America, which to me is the number one problem that our society is facing right now.
0:47:19 Where you have half of Americans who say that they are struggling with their mental health as a result of their loneliness.
0:47:25 Among my generation, that number is 80%. You’ve got time spent with friends at an all-time low.
0:47:31 You’ve got one in 10 Americans saying they have zero friends, which is at an all-time high.
0:47:37 You’ve got the Surgeon General declaring a state of emergency about loneliness in this country.
0:47:49 But the idea that we’re promoting this generation, you’ve got whatever it is, half of my generation working remotely, doing their work from their laptops in their beds.
0:47:56 I know people who graduate a college and they work from their beds, they don’t get up and get dressed and put their clothes on.
0:48:01 They stay in their pajamas, they open up their laptop and they just lean back and do their job.
0:48:07 And then we’re wondering why are kids not motivated, why are they feeling isolated, why are they feeling lonely.
0:48:10 It’s like, get them in the fucking office.
0:48:20 So one of the kind of core characteristics or attributes of an autocrat is that when someone rises to power and becomes very popular,
0:48:26 the autocrat senses that they are a threat to them and they have them murdered.
0:48:30 I just felt that sensation with you.
0:48:34 You are now, Ed, you are now better at this shit than me.
0:48:41 Let me get this, people need to get in the office, loneliness, isolation and you’re much, I literally just suffer the moment.
0:48:47 Memo to self, must kill Ed, threat to dominance and power.
0:48:51 Anyways, I thought that was, I think you’re exactly right.
0:48:55 And I think the, I love that you’re saying this, I love you believe it.
0:48:57 I’m going to be redundant.
0:49:06 I think the biggest threat to America is one extremism on both sides of the political spectrum that no one wants to get along.
0:49:09 There’s no connective tissue around institutions to get us to get along.
0:49:16 It’s far, far right or far, far left and they all meet to agree on really heinous things.
0:49:25 And two, that people in isolation become not only unhappy, I’m sad for them, but men in isolation become dangerous.
0:49:29 They become prone to conspiracy theory, they become violent.
0:49:33 Women who become lonely, it’s no less a tragedy, but they don’t pick up AR-15s.
0:49:38 They are generally pretty good at finding other places to give and receive love.
0:49:53 But I find it just tragic when I’m meeting so many people in their 20s and 30s and I talk to them about, you know, working at home and they’re upset they can’t meet people and their expectations are so unreasonable.
0:50:00 I’m like, this person is just setting themselves up for kind of a life of incremental but increasing disappointment.
0:50:01 We need structure.
0:50:07 I think we thought when the pandemic happened that we’re all just kind of these floating islands, we can do whatever we want.
0:50:11 But I think it turns out that we actually need structure.
0:50:20 Sure, it’s kind of annoying if you’re standing by the cooler and you, you know, have to have a conversation with someone you don’t even know that well and whatever.
0:50:26 I mean, all of the annoying things of the office, sure, there are the downsides of the office.
0:50:31 But I mean, clearly we need these guardrails.
0:50:36 We need a system of getting up, doing the commute, interacting with other people.
0:50:37 It’s just something we need.
0:50:39 It’s hardwired into us.
0:50:43 I think the whole shooting match is relationships and mating.
0:50:51 And the most rewarding things in life, I think, are a function of your friendships, the colleagues you meet at work and who you decide to have kids with.
0:50:56 And let me be clear before the DEI people come for me or lawyers.
0:50:59 I can feel that they’re gearing up.
0:51:05 If you are above a certain seniority level in any company, your fly is up and locked, female or male.
0:51:09 You do not have sex with other employees, full stop.
0:51:19 Because the power dynamic creates too much risk for you, for the company, and quite frankly, for a situation where you put someone in a very uncomfortable position.
0:51:23 Above a certain level, VP or above, pick the level.
0:51:24 That’s it.
0:51:26 You take that shit off campus.
0:51:35 But below that, I have gone to, I don’t know, a dozen weddings of people who used to work at my firm.
0:51:36 And I’m always the last one to know.
0:51:37 I’m like, what, they’re seeing each other?
0:51:40 Like, yeah, they’ve been going out for two years.
0:51:42 And it’s a wonderful thing.
0:51:43 It’s a wonderful thing.
0:51:49 I’m pretty sure that you guys, the kids in our firm, pick that workspace because I’ve heard there’s a bunch of hot men there.
0:51:51 That’s just what I’ve heard.
0:51:52 That’s just what I’ve heard.
0:51:54 Claire, can you validate that?
0:51:55 Where’s our producer?
0:52:01 We need a Mia or Caroline to come on and comment for that one.
0:52:02 I’m sorry.
0:52:03 I’m a straight man.
0:52:08 We’re both looking at the same thing, Claire, but I can recognize, I can recognize hot men.
0:52:10 I can recognize hot men.
0:52:11 Way in here.
0:52:19 They are, yes, there are many hot men who all kind of look the same, very tech bro, kind of keep to themselves.
0:52:20 Very demure.
0:52:21 Very demure.
0:52:22 Yeah.
0:52:31 Anyways, I’m going to try and save this by saying that when people meet, 99% of the relationships that begin at work are consensual.
0:52:33 People, we need to err on the side.
0:52:35 I’m going to go totally off-script here.
0:52:37 You know what young people need to do?
0:52:40 Claire, Ed, you need to start fucking drinking more.
0:52:41 Not the two of you.
0:52:43 You’re in healthy relationships.
0:52:49 But all this shit from Peter Atia and the Huberman Lab talking about how bad alcohol is, they see drunkenness among young people.
0:52:50 You know what I see?
0:52:51 I see togetherness.
0:52:54 You guys need more reasons to bond.
0:53:00 You need more reasons to establish long-term camaraderie and affection for each other.
0:53:03 You need more confidence to kiss each other.
0:53:06 You need more, and all roads lead to alcohol.
0:53:11 Anything that can get people together.
0:53:13 I think alcohol gets people together.
0:53:15 And that’s why it’s good.
0:53:17 Christmas parties get people together.
0:53:19 The office gets people together.
0:53:27 And we’re spending nine hours of our waking hours every day at the office or doing our work.
0:53:31 You might as well just include some other people in that time.
0:53:36 All I will say to end here is nothing happens alone in your bedroom.
0:53:38 Nothing exciting happens.
0:53:42 Let’s take a look at the week ahead.
0:53:46 We’ll see data on the Personal Consumption Expenditures Index for August.
0:53:48 And we’ll also see earnings from Costco.
0:53:50 Scott, do you have any predictions for us?
0:53:52 I think Starlink is going to be hugely disruptive.
0:53:56 Okay, buy SpaceX stock.
0:53:58 I don’t think that’s the play here.
0:54:05 I think the play is there’s going to be a bunch of companies are going to get the shit kicked out of them.
0:54:12 So I did a search on companies offering some sort of wireless or broadband in the transportation sector.
0:54:14 So GoGo, which I hate.
0:54:15 I hate GoGo.
0:54:16 I literally hate it.
0:54:22 Viasat, MRSAT, KVH Industries, Iridium, SES.SA.
0:54:24 I don’t know what that is.
0:54:25 Utilstat.
0:54:26 God, these are terrible names.
0:54:27 Telestat.
0:54:33 I bet a basket of these eight companies, and I’d be curious what their performance is so far.
0:54:38 But I think when Starlink, when the word is out, they’re probably all in denial in the earnings call saying like McDonald’s.
0:54:39 Oh, it wasn’t GLP1.
0:54:41 It was inflation, which might be true.
0:54:48 But the moment these companies start coming out and saying that, yeah, Starlink is eating into our lunch.
0:54:56 And an analyst goes, well, is there any way you could shoot hundreds of satellites into the air and control 60% of the low Earth orbit?
0:55:00 And they’re going to realize, okay, there’s nothing we can do except try and slowly die here.
0:55:08 I think these companies are going to be the equivalent of, as I said, Paramount Global, Warner Brothers Discovery.
0:55:11 Name your company that’s getting the shit kicked out of it at the hand of Netflix.
0:55:16 SpaceX is to these companies what Netflix has done to the rest of the entertainment industry.
0:55:19 I think we need to try to secure you some advisory shares at SpaceX.
0:55:23 But you might have sort of botched your chances of that with the whole Elon ranting thing.
0:55:24 Yeah, I don’t think that’s going to happen.
0:55:26 Although I did meet his brother.
0:55:27 His brother came up to me.
0:55:29 He’s very tall, very handsome, his brother.
0:55:30 That’s a good idea.
0:55:31 Let’s cozy up to Kimball.
0:55:32 Yeah.
0:55:33 Let’s cozy up.
0:55:34 Is that his name?
0:55:35 Kimball.
0:55:36 Kendall Roy.
0:55:37 Kimball.
0:55:38 Kimball.
0:55:43 I went and I busted into my speech about SpaceX and he came in and said, thank you for saying nice things about SpaceX.
0:55:44 I’m like, is that you?
0:55:46 And he’s like, oh no, I’m Elon’s brother.
0:55:47 Awkward.
0:55:48 Awkward.
0:55:49 Awkward.
0:55:51 Anyways, read us out, Ed.
0:55:54 This episode was produced by Claire Miller and engineered by Benjamin Spencer.
0:55:56 Our associate producer is Alison Weiss.
0:55:58 Our executive producer is Catherine Dillon.
0:56:02 Mia Silverio is our research lead and Drew Burris is our technical director.
0:56:05 Thank you for listening to Proffdue Markets from the Vox Media Podcast Network.
0:56:10 If you liked what you heard, hit follow and leave us a review wherever you get your podcasts.
0:56:12 Live times.
0:56:34 You held me in kind reunion as the world turns.
0:56:54 I don’t need to be that good today because I’m looking especially handsome.
0:56:56 Jesus, hello ladies.
0:56:57 Hello.
0:56:58 Look at that.
0:56:59 That glow.
0:57:01 That London glow.
0:57:04 Where are you, Ed?
0:57:09 You look like you got a Norwegian family is adopted.
0:57:10 Where are you?
0:57:11 Looks very European.
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Scott and Ed open the show by discussing the Federal Reserve’s rate cut decision, SpaceX’s deal with United, Blackrock and Microsoft’s AI infrastructure fund, and Instagram’s new teen accounts. Then Scott and Ed share their reactions to Lionsgate’s partnership with an AI company. Scott also offers advice to anyone in Hollywood whose job could be threatened by AI. Finally, they discuss the benefits of Amazon’s new return to work policy but explain why flexibility for certain employees is very necessary.
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