AI transcript
0:00:06 -Hey, whatcha doin’? -Programming our thermostat to 17 degrees when we’re out at work or asleep.
0:00:12 We’re taking control of our energy use this winter with some easy energy saving tips I got from Fortis, B.C.
0:00:16 Ooh, conserve energy and save money? Maybe to buy those matching winter jackets?
0:00:21 Uh, no. We’re also getting that whole matching outfit thing under control.
0:00:27 Discover low and no-cost energy saving tips at fortisbc.com/energysavingtips.
0:00:31 -Matching Jacksuits? -Please, no.
0:00:33 This isn’t your Grandpa’s Finance podcast.
0:00:37 It’s Vivian too, your rich BFF and host of the Net Worth & Chill podcast.
0:00:42 This is money talk that’s actually fun, actually relatable and will actually make you money.
0:00:45 I’m breaking down investments, side hustles and wealth strategies.
0:00:49 No boring spreadsheets, just real talk that’ll have you leveling up your financial game.
0:00:51 With amazing guests like Glenda Baker.
0:00:54 There’s never been any house that I’ve sold in the last 32 years.
0:00:57 It’s not worth more today than it was the day that I sold it.
0:01:00 This is a money podcast that you’ll actually want to listen to.
0:01:02 Follow Net Worth & Chill wherever you listen to podcasts.
0:01:04 Your bank account will thank you later.
0:01:09 I’m Scott Galloway, and this is No Mercy, No Malice.
0:01:12 The best way to predict the future is to make it.
0:01:17 2025 Predictions, as read by George Hahn.
0:01:24 Predictions are a terrible business.
0:01:29 If you get it right, the events leading up to the prediction render it less bold.
0:01:36 If you get it wrong, you’ll be reminded of your gaffe 10,000 times a day, like on Twitter.
0:01:41 The purpose isn’t really to be right, in fact, but to catalyze a conversation.
0:01:44 Every year we make predictions.
0:01:46 We start by holding ourselves accountable.
0:01:52 To see a report card of our 2024 predictions, check out the written version of No Mercy,
0:01:54 No Malice at ProfGalloway.com.
0:02:00 For you listeners, here are our predictions for 2025.
0:02:03 Prediction number one.
0:02:06 Power couple, open video.
0:02:14 Since the launch of ChatGPT in November 2022, investors have added a staggering 8.2 trillion
0:02:21 dollars to the market valuations of tech’s big six firms. Alphabet, Amazon, Apple, Meta,
0:02:22 Microsoft, and Nvidia.
0:02:28 For context, the 2024 federal budget was $6.8 trillion.
0:02:36 Companies that referenced AI during their earnings calls registered a 12% increase on
0:02:42 average in performance compared to a 9% increase for those that didn’t mention it.
0:02:47 The AI ecosystem is settling into three layers.
0:02:51 Applications, like Duolingo, Netflix, and Tesla.
0:02:56 AI models, like Anthropic, Gemini, and OpenAI.
0:03:02 And infrastructure, like AWS, Google Cloud, or Nvidia.
0:03:05 Two companies dominate.
0:03:12 OpenAI has doubled its annualized revenue to $3.4 billion.
0:03:14 In the past six months.
0:03:21 And its ChatGPT accounts for 56% of premium LLM subscriptions.
0:03:23 I.e. people pulling out their credit cards.
0:03:31 Over the past 12 months, Nvidia has reported $96 billion in revenue.
0:03:34 Four times its 2022 total.
0:03:39 I look at peer reviewed research to evaluate whether a technology is enduring.
0:03:47 Nvidia chips are cited in 19 times more research than those of its competitors combined.
0:03:53 For two companies to dominate a technology this early is extraordinary.
0:04:01 Prediction number two, the AI company of 2025, Meta.
0:04:07 No business is better positioned to register progress in AI than Meta.
0:04:13 Nine out of 10 internet users, excluding China, are active on Meta platforms.
0:04:20 The company has access to more unique human language data, i.e. raw training data,
0:04:24 than Google search, Reddit, Wikipedia, and X combined.
0:04:32 In terms of compute, Meta has purchased more Nvidia Hopper GPUs, advanced AI hardware,
0:04:40 than any US company other than Microsoft, giving it unmatched AI training and deployment capacity.
0:04:47 Prediction number three, Palindrome, service as a software.
0:04:52 So far, the benefits of AI have accrued to existing players.
0:04:59 The next set of winners will be firms that capitalize on service as a software.
0:05:06 i.e. taking human intensive services and putting a thick layer of AI on top to scale with less labor.
0:05:12 This is a fancy way of saying there will be more consumer facing AI applications.
0:05:18 The real cabbage, however, is in routinizing back office functions like accounting,
0:05:21 compliance, customer service, etc.
0:05:29 Prediction number four, technology of 2025, nuclear.
0:05:33 AI’s choke point is energy.
0:05:39 A chat GPT query demands 10 times the energy of a Google query.
0:05:49 The majority of the 10 most valuable companies in 1980 and 2024 were, are, in energy and tech.
0:05:57 However, the construction of acres of data centers and the energy investments needed to power them
0:05:58 reflected deeper convergence.
0:06:05 AI is accelerating big techs transformation from an industry that sells computers
0:06:07 into an industry that sells compute.
0:06:12 In a knowledge economy, compute is energy.
0:06:19 Wind and solar are great, but they lack the scale and reliability of nuclear power.
0:06:29 One nuclear reactor produces the equivalent of 800 wind turbines or 8.5 million solar panels.
0:06:32 Nuclear is also carbon free.
0:06:37 48% of the clean energy in the U.S. comes from nuclear.
0:06:42 Nuclear power may be the worst managed brand in history.
0:06:47 Every energy source has trade offs in emissions and externalities.
0:06:51 I believe nuclear energy represents the best trade.
0:06:58 If you gathered all the used nuclear fuel produced by the U.S. in the last 60 years,
0:07:02 it would occupy only 10 yards of a football field.
0:07:06 Note, do not go anywhere near that field.
0:07:12 Prediction number five, get used to it, drones.
0:07:21 Radar, jet engines, nuclear power, GPS, and blood banks were all developed during wartime.
0:07:27 There’s something about war and the potential loss of a civilization that inspires creativity.
0:07:35 At the outset of the war in Ukraine, Russia’s defense budget and standing army were 10 times
0:07:38 and five times the size of Ukraine’s respectively.
0:07:44 Drones are the premier technological innovation birthed by the conflict.
0:07:51 Drones provide constant surveillance capabilities and enable precision strikes
0:07:53 at a fraction of traditional costs.
0:07:59 A successful drone strike can yield a 100,000% return.
0:08:07 For example, $400 drones routinely destroy $4 million tanks.
0:08:17 3D printing, AI, and micro cameras have converged to shape the latest David versus Goliath sequel.
0:08:24 Using drones for last mile delivery of contracts and commuters, search and rescue missions,
0:08:31 and monitoring and maintenance in manufacturing and agriculture should reap substantial gains.
0:08:41 Prediction number six, Musk bids for Warner Brothers Discovery, CNN, or another iconic media firm.
0:08:47 The Wall Street Journal reported that Elon is addicted to ketamine.
0:08:54 I believe that’s the delivery mechanism, but the nicotine, where his real addiction resides,
0:09:00 is attention. For 10% of his net worth, $44 billion for Twitter,
0:09:05 he can impose himself on all of us nearly all the fucking time.
0:09:11 Question, if he’s going to come undone, can he do it like the rest of us? In private?
0:09:19 Anyway, Warner Brothers Discovery has a market cap of $26 billion plus debt.
0:09:23 If the idea sounds outrageous, it isn’t.
0:09:31 John Stanky, CEO of AT&T, put a condition on the sale of WBD that it had to be a
0:09:37 single class of stock to get the greatest price and net the company a takeover premium.
0:09:44 In the words of Gordon Gekko, WBD is breakable, i.e. it can be acquired.
0:09:52 After his fallout with Trump and the public’s increasing fatigue, Jesus make it him just go away.
0:09:56 Threatens to push him out of the spotlight,
0:10:01 Elon will force himself back into the news cycle by again becoming the news.
0:10:09 He could also buy MSNBC as unlike MSNBC, he does have a sense of humor.
0:10:16 Prediction number seven, investment opportunity, emerging markets.
0:10:23 The S&P 500 outperformed Vanguard’s all-world XUS index ETF
0:10:32 plus 56% to plus 23% respectively from 2023 through 2024.
0:10:38 Historically, when U.S. equities fall, emerging markets rise.
0:10:46 These cycles typically last about a decade. I believe we’re overdue for a course correction.
0:10:52 The U.S. stock market now makes up 50% of the total market cap globally.
0:11:00 When stocks get this expensive, returns go down and capital looks for greater returns elsewhere.
0:11:06 Since 1989, emerging markets have typically outperformed developed markets
0:11:13 by 27% after a Fed rate cut. Demographics are destiny.
0:11:19 The growth in working age populations favors India, Indonesia, and other developing nations.
0:11:25 The share of institutional capital invested in the markets is at a cyclical low.
0:11:34 A reversion to the mean would represent inflows of $910 billion to emerging markets.
0:11:43 The X factor is Trump. He’s called for a 10% to 20% tariff on all imports
0:11:51 and a 60% to 100% tariff on goods from China. I don’t believe he’ll follow through though,
0:11:58 as tariff is Latin for tax. At the first hint of inflation, alarm bells will
0:12:04 sound and the adults in the administration looking at the bond market will respond crisply
0:12:10 and force the administration to slow their roll. And Republicans in Congress will find
0:12:17 their backbones when they realize that 90% of the presents under the Christmas tree come from China
0:12:21 and their dear leader is, post 2026, a lame duck.
0:12:28 Prediction #8 Platform YouTube
0:12:33 Netflix didn’t win the streaming wars. YouTube did.
0:12:40 Last year, YouTube, which spends $0 on content (it shares revenue with creators instead of paying
0:12:48 them), became the first streaming platform to reach 10% of all television viewing. 81% of
0:12:56 GenAlpha viewers said they watched YouTube recently, compared to 62% who said they watched a subscription
0:13:05 streaming service, and 44% who said they watched TikTok. In the US and UK, one-third of kids aged
0:13:14 8 to 12 said YouTube was their number one career choice. Movistar didn’t even make the list.
0:13:22 Also, YouTube is the number one podcast platform, adding a tailwind no other streamer has.
0:13:30 If Alphabet were forced to spin off YouTube, the company would likely be worth half a trillion
0:13:35 dollars, versus Netflix’s market cap of $350 billion.
0:13:43 Prediction #9 Media Podcasts
0:13:50 I’m talking my own book here, but I’ve been in the podcasting business for almost a decade,
0:13:57 and this is the first time I’ve called it the media of the year. The only ad-supported medium
0:14:06 growing as fast as meta, TikTok, Alphabet, and Reddit is podcasting. Of the estimated 3.2 million
0:14:14 pods, 600,000 put out content each week, and I estimate only 600 are economically viable.
0:14:23 This is a striking concentration of power, with the top 10 pods commanding 35% of the listenership.
0:14:32 Kamala Harris would have needed to appear on CNN, Fox, and MSNBC three hours every night
0:14:39 during prime time for two weeks to reach as many people as Donald Trump did going on Joe Rogan.
0:14:45 Podcasts’ share of attention is well ahead of their share of ad revenue.
0:14:52 This delta will close. Since the election, our pods have seen a 30% increase in revenue.
0:15:00 My prediction is that pods’ ad revenue will grow by 20+% in 2025.
0:15:07 Listenership will continue to grow as well, and the ARPU, like those of meta and Alphabet,
0:15:13 will increase dramatically as advertisers discover this is where young, successful consumers have
0:15:24 been hiding. Prediction number 10. IPO, Sheehan. Disclosure, I’m an investor.
0:15:33 One-third of Gen Z consumers say they’re addicted to fast fashion. Traditional retailers release
0:15:39 100 new styles a week. Fast fashion retailers put out 100 styles per day.
0:15:49 Sheehan pushes out 7,000 styles per day. Its operations are remarkably asset-light,
0:15:54 as Sheehan is an IP business that doesn’t own any factories, trucks, or stores.
0:16:02 Instead, its software tracks activity on the site, sends orders to factories based on their
0:16:09 ability to calibrate demand, and then puts in motion the transportation. Also, there are
0:16:16 effectively no returns. The Achilles heel of any retail business. As the products are so cheap,
0:16:21 people don’t go through the hassle of sending them back. Similar to other asset-light winners
0:16:29 like Airbnb, NVIDIA, or Uber, Sheehan’s revenue per employee dwarfs that of the incumbents.
0:16:40 Prediction number 11. Business trend, M&A. A historic amount of cash is on the sidelines.
0:16:47 Since 2003, private equity’s dry powder, i.e. the committed capital not yet allocated,
0:16:58 increased 8X to $4 trillion. Corporate cash holdings total $4.1 trillion. Context,
0:17:08 U.S. GDP is around $27 trillion. The average closing time for U.S. deal makers in 2022
0:17:19 was 161 days, a 14% increase since 2018. For deals exceeding $10 billion in value,
0:17:28 closing times have surged by 66% to an average of 323 days. Over the past four years,
0:17:34 Lena Kahn has been an aggressive antitrust enforcer, and the Biden administration has
0:17:41 published 209 economically significant regulations, more than any president since Reagan.
0:17:49 The lesson? Elections have consequences. Setting aside whatever grievances Trump
0:17:54 may hold against specific tech and media companies, the perception is that his
0:18:00 administration will likely be more friendly to M&A. Some predictions regarding who will be on top
0:18:10 of some big transactions? Comcast, Uber, and, see above, Musk. Also, I believe someone will take
0:18:19 Intel and/or Boeing private. Prediction number 12. Tech movement, banning phones.
0:18:27 When we look back on this age, the thing we’ll regret most is letting our kids become addicts.
0:18:33 The substance is social media. The delivery mechanism is the phone.
0:18:45 On a typical day, a teen receives 237 notifications. One study found that 97% of kids
0:18:51 use their phone during school hours for a median of about 43 minutes per day.
0:18:59 Think about that. Basically, every teen in America misses 10% of school every day.
0:19:06 Giving students unrestricted access to phones has been a great move, said no teacher ever.
0:19:14 Banning them in school is a return to sanity. The good news, 18 states have passed laws
0:19:19 restricting the use of phones in school, and roughly three-quarters of schools
0:19:25 have policies restricting their use in the classroom. Better news? Our response,
0:19:36 while slow, is bipartisan. Best news? Test scores have improved by 6% in schools that have banned phones.
0:19:48 Prediction number 13. Chemical testosterone. Women are ascendant, something to celebrate,
0:19:55 while young men are struggling. There has never been a cohort that’s fallen further
0:20:04 faster than young men living in Western democracies. The percentage of young men aged 20 to 24,
0:20:11 who are neither in school nor working, has tripled since 1980. Workforce participation
0:20:19 among men has fallen below 90%, while median hourly wages are $3 less per hour adjusted for
0:20:29 inflation than they were in 1970. This is deadly. Over the past 20 years, America’s incremental
0:20:38 deaths of despair totaled 414,000, exceeding the 407,000 Americans killed in World War II.
0:20:47 It’s also a mating crisis, as women traditionally mate horizontally and up socioeconomically,
0:20:55 whereas men mate horizontally and down. When the pool of horizontal and up young men shrinks,
0:21:01 there are fewer mating opportunities. And without the guardrails of a relationship,
0:21:10 young men behave as if they have no guardrails. Families feel this. I believe the 2024 election
0:21:15 was about struggling young people, especially struggling young men. If your son is in the
0:21:21 basement vaping and playing video games, you don’t really care about trans rights or Ukraine,
0:21:28 you just want change, i.e. chaos and disruption. The Trump campaign saw this and flew into the
0:21:38 manisphere with coarse language, crypto, Rogan, UFC, and Hulk Hogan. Trump gained 15% with young men,
0:21:46 the biggest pivot from Democrats to Republicans of any age group. Another big shift was among women
0:21:55 aged 45 to 64. I believe those are the mothers of struggling young men. America elected President
0:22:03 T. The T stands for testosterone. The election was supposed to be a referendum on women’s rights.
0:22:17 It was instead a referendum on failing young men. Prediction number 14. 2025 will be a great year
0:22:26 for you. How do I know this? A, I don’t. However, I do really hope your year is full of prosperity
0:22:33 and time with loved ones. I’ve read that if you write down a goal, it’s 40% more likely to happen.
0:22:40 And I’ve done this. See two sentences ago. So we have that going for us.
0:22:56 Life is so rich.
0:00:12 We’re taking control of our energy use this winter with some easy energy saving tips I got from Fortis, B.C.
0:00:16 Ooh, conserve energy and save money? Maybe to buy those matching winter jackets?
0:00:21 Uh, no. We’re also getting that whole matching outfit thing under control.
0:00:27 Discover low and no-cost energy saving tips at fortisbc.com/energysavingtips.
0:00:31 -Matching Jacksuits? -Please, no.
0:00:33 This isn’t your Grandpa’s Finance podcast.
0:00:37 It’s Vivian too, your rich BFF and host of the Net Worth & Chill podcast.
0:00:42 This is money talk that’s actually fun, actually relatable and will actually make you money.
0:00:45 I’m breaking down investments, side hustles and wealth strategies.
0:00:49 No boring spreadsheets, just real talk that’ll have you leveling up your financial game.
0:00:51 With amazing guests like Glenda Baker.
0:00:54 There’s never been any house that I’ve sold in the last 32 years.
0:00:57 It’s not worth more today than it was the day that I sold it.
0:01:00 This is a money podcast that you’ll actually want to listen to.
0:01:02 Follow Net Worth & Chill wherever you listen to podcasts.
0:01:04 Your bank account will thank you later.
0:01:09 I’m Scott Galloway, and this is No Mercy, No Malice.
0:01:12 The best way to predict the future is to make it.
0:01:17 2025 Predictions, as read by George Hahn.
0:01:24 Predictions are a terrible business.
0:01:29 If you get it right, the events leading up to the prediction render it less bold.
0:01:36 If you get it wrong, you’ll be reminded of your gaffe 10,000 times a day, like on Twitter.
0:01:41 The purpose isn’t really to be right, in fact, but to catalyze a conversation.
0:01:44 Every year we make predictions.
0:01:46 We start by holding ourselves accountable.
0:01:52 To see a report card of our 2024 predictions, check out the written version of No Mercy,
0:01:54 No Malice at ProfGalloway.com.
0:02:00 For you listeners, here are our predictions for 2025.
0:02:03 Prediction number one.
0:02:06 Power couple, open video.
0:02:14 Since the launch of ChatGPT in November 2022, investors have added a staggering 8.2 trillion
0:02:21 dollars to the market valuations of tech’s big six firms. Alphabet, Amazon, Apple, Meta,
0:02:22 Microsoft, and Nvidia.
0:02:28 For context, the 2024 federal budget was $6.8 trillion.
0:02:36 Companies that referenced AI during their earnings calls registered a 12% increase on
0:02:42 average in performance compared to a 9% increase for those that didn’t mention it.
0:02:47 The AI ecosystem is settling into three layers.
0:02:51 Applications, like Duolingo, Netflix, and Tesla.
0:02:56 AI models, like Anthropic, Gemini, and OpenAI.
0:03:02 And infrastructure, like AWS, Google Cloud, or Nvidia.
0:03:05 Two companies dominate.
0:03:12 OpenAI has doubled its annualized revenue to $3.4 billion.
0:03:14 In the past six months.
0:03:21 And its ChatGPT accounts for 56% of premium LLM subscriptions.
0:03:23 I.e. people pulling out their credit cards.
0:03:31 Over the past 12 months, Nvidia has reported $96 billion in revenue.
0:03:34 Four times its 2022 total.
0:03:39 I look at peer reviewed research to evaluate whether a technology is enduring.
0:03:47 Nvidia chips are cited in 19 times more research than those of its competitors combined.
0:03:53 For two companies to dominate a technology this early is extraordinary.
0:04:01 Prediction number two, the AI company of 2025, Meta.
0:04:07 No business is better positioned to register progress in AI than Meta.
0:04:13 Nine out of 10 internet users, excluding China, are active on Meta platforms.
0:04:20 The company has access to more unique human language data, i.e. raw training data,
0:04:24 than Google search, Reddit, Wikipedia, and X combined.
0:04:32 In terms of compute, Meta has purchased more Nvidia Hopper GPUs, advanced AI hardware,
0:04:40 than any US company other than Microsoft, giving it unmatched AI training and deployment capacity.
0:04:47 Prediction number three, Palindrome, service as a software.
0:04:52 So far, the benefits of AI have accrued to existing players.
0:04:59 The next set of winners will be firms that capitalize on service as a software.
0:05:06 i.e. taking human intensive services and putting a thick layer of AI on top to scale with less labor.
0:05:12 This is a fancy way of saying there will be more consumer facing AI applications.
0:05:18 The real cabbage, however, is in routinizing back office functions like accounting,
0:05:21 compliance, customer service, etc.
0:05:29 Prediction number four, technology of 2025, nuclear.
0:05:33 AI’s choke point is energy.
0:05:39 A chat GPT query demands 10 times the energy of a Google query.
0:05:49 The majority of the 10 most valuable companies in 1980 and 2024 were, are, in energy and tech.
0:05:57 However, the construction of acres of data centers and the energy investments needed to power them
0:05:58 reflected deeper convergence.
0:06:05 AI is accelerating big techs transformation from an industry that sells computers
0:06:07 into an industry that sells compute.
0:06:12 In a knowledge economy, compute is energy.
0:06:19 Wind and solar are great, but they lack the scale and reliability of nuclear power.
0:06:29 One nuclear reactor produces the equivalent of 800 wind turbines or 8.5 million solar panels.
0:06:32 Nuclear is also carbon free.
0:06:37 48% of the clean energy in the U.S. comes from nuclear.
0:06:42 Nuclear power may be the worst managed brand in history.
0:06:47 Every energy source has trade offs in emissions and externalities.
0:06:51 I believe nuclear energy represents the best trade.
0:06:58 If you gathered all the used nuclear fuel produced by the U.S. in the last 60 years,
0:07:02 it would occupy only 10 yards of a football field.
0:07:06 Note, do not go anywhere near that field.
0:07:12 Prediction number five, get used to it, drones.
0:07:21 Radar, jet engines, nuclear power, GPS, and blood banks were all developed during wartime.
0:07:27 There’s something about war and the potential loss of a civilization that inspires creativity.
0:07:35 At the outset of the war in Ukraine, Russia’s defense budget and standing army were 10 times
0:07:38 and five times the size of Ukraine’s respectively.
0:07:44 Drones are the premier technological innovation birthed by the conflict.
0:07:51 Drones provide constant surveillance capabilities and enable precision strikes
0:07:53 at a fraction of traditional costs.
0:07:59 A successful drone strike can yield a 100,000% return.
0:08:07 For example, $400 drones routinely destroy $4 million tanks.
0:08:17 3D printing, AI, and micro cameras have converged to shape the latest David versus Goliath sequel.
0:08:24 Using drones for last mile delivery of contracts and commuters, search and rescue missions,
0:08:31 and monitoring and maintenance in manufacturing and agriculture should reap substantial gains.
0:08:41 Prediction number six, Musk bids for Warner Brothers Discovery, CNN, or another iconic media firm.
0:08:47 The Wall Street Journal reported that Elon is addicted to ketamine.
0:08:54 I believe that’s the delivery mechanism, but the nicotine, where his real addiction resides,
0:09:00 is attention. For 10% of his net worth, $44 billion for Twitter,
0:09:05 he can impose himself on all of us nearly all the fucking time.
0:09:11 Question, if he’s going to come undone, can he do it like the rest of us? In private?
0:09:19 Anyway, Warner Brothers Discovery has a market cap of $26 billion plus debt.
0:09:23 If the idea sounds outrageous, it isn’t.
0:09:31 John Stanky, CEO of AT&T, put a condition on the sale of WBD that it had to be a
0:09:37 single class of stock to get the greatest price and net the company a takeover premium.
0:09:44 In the words of Gordon Gekko, WBD is breakable, i.e. it can be acquired.
0:09:52 After his fallout with Trump and the public’s increasing fatigue, Jesus make it him just go away.
0:09:56 Threatens to push him out of the spotlight,
0:10:01 Elon will force himself back into the news cycle by again becoming the news.
0:10:09 He could also buy MSNBC as unlike MSNBC, he does have a sense of humor.
0:10:16 Prediction number seven, investment opportunity, emerging markets.
0:10:23 The S&P 500 outperformed Vanguard’s all-world XUS index ETF
0:10:32 plus 56% to plus 23% respectively from 2023 through 2024.
0:10:38 Historically, when U.S. equities fall, emerging markets rise.
0:10:46 These cycles typically last about a decade. I believe we’re overdue for a course correction.
0:10:52 The U.S. stock market now makes up 50% of the total market cap globally.
0:11:00 When stocks get this expensive, returns go down and capital looks for greater returns elsewhere.
0:11:06 Since 1989, emerging markets have typically outperformed developed markets
0:11:13 by 27% after a Fed rate cut. Demographics are destiny.
0:11:19 The growth in working age populations favors India, Indonesia, and other developing nations.
0:11:25 The share of institutional capital invested in the markets is at a cyclical low.
0:11:34 A reversion to the mean would represent inflows of $910 billion to emerging markets.
0:11:43 The X factor is Trump. He’s called for a 10% to 20% tariff on all imports
0:11:51 and a 60% to 100% tariff on goods from China. I don’t believe he’ll follow through though,
0:11:58 as tariff is Latin for tax. At the first hint of inflation, alarm bells will
0:12:04 sound and the adults in the administration looking at the bond market will respond crisply
0:12:10 and force the administration to slow their roll. And Republicans in Congress will find
0:12:17 their backbones when they realize that 90% of the presents under the Christmas tree come from China
0:12:21 and their dear leader is, post 2026, a lame duck.
0:12:28 Prediction #8 Platform YouTube
0:12:33 Netflix didn’t win the streaming wars. YouTube did.
0:12:40 Last year, YouTube, which spends $0 on content (it shares revenue with creators instead of paying
0:12:48 them), became the first streaming platform to reach 10% of all television viewing. 81% of
0:12:56 GenAlpha viewers said they watched YouTube recently, compared to 62% who said they watched a subscription
0:13:05 streaming service, and 44% who said they watched TikTok. In the US and UK, one-third of kids aged
0:13:14 8 to 12 said YouTube was their number one career choice. Movistar didn’t even make the list.
0:13:22 Also, YouTube is the number one podcast platform, adding a tailwind no other streamer has.
0:13:30 If Alphabet were forced to spin off YouTube, the company would likely be worth half a trillion
0:13:35 dollars, versus Netflix’s market cap of $350 billion.
0:13:43 Prediction #9 Media Podcasts
0:13:50 I’m talking my own book here, but I’ve been in the podcasting business for almost a decade,
0:13:57 and this is the first time I’ve called it the media of the year. The only ad-supported medium
0:14:06 growing as fast as meta, TikTok, Alphabet, and Reddit is podcasting. Of the estimated 3.2 million
0:14:14 pods, 600,000 put out content each week, and I estimate only 600 are economically viable.
0:14:23 This is a striking concentration of power, with the top 10 pods commanding 35% of the listenership.
0:14:32 Kamala Harris would have needed to appear on CNN, Fox, and MSNBC three hours every night
0:14:39 during prime time for two weeks to reach as many people as Donald Trump did going on Joe Rogan.
0:14:45 Podcasts’ share of attention is well ahead of their share of ad revenue.
0:14:52 This delta will close. Since the election, our pods have seen a 30% increase in revenue.
0:15:00 My prediction is that pods’ ad revenue will grow by 20+% in 2025.
0:15:07 Listenership will continue to grow as well, and the ARPU, like those of meta and Alphabet,
0:15:13 will increase dramatically as advertisers discover this is where young, successful consumers have
0:15:24 been hiding. Prediction number 10. IPO, Sheehan. Disclosure, I’m an investor.
0:15:33 One-third of Gen Z consumers say they’re addicted to fast fashion. Traditional retailers release
0:15:39 100 new styles a week. Fast fashion retailers put out 100 styles per day.
0:15:49 Sheehan pushes out 7,000 styles per day. Its operations are remarkably asset-light,
0:15:54 as Sheehan is an IP business that doesn’t own any factories, trucks, or stores.
0:16:02 Instead, its software tracks activity on the site, sends orders to factories based on their
0:16:09 ability to calibrate demand, and then puts in motion the transportation. Also, there are
0:16:16 effectively no returns. The Achilles heel of any retail business. As the products are so cheap,
0:16:21 people don’t go through the hassle of sending them back. Similar to other asset-light winners
0:16:29 like Airbnb, NVIDIA, or Uber, Sheehan’s revenue per employee dwarfs that of the incumbents.
0:16:40 Prediction number 11. Business trend, M&A. A historic amount of cash is on the sidelines.
0:16:47 Since 2003, private equity’s dry powder, i.e. the committed capital not yet allocated,
0:16:58 increased 8X to $4 trillion. Corporate cash holdings total $4.1 trillion. Context,
0:17:08 U.S. GDP is around $27 trillion. The average closing time for U.S. deal makers in 2022
0:17:19 was 161 days, a 14% increase since 2018. For deals exceeding $10 billion in value,
0:17:28 closing times have surged by 66% to an average of 323 days. Over the past four years,
0:17:34 Lena Kahn has been an aggressive antitrust enforcer, and the Biden administration has
0:17:41 published 209 economically significant regulations, more than any president since Reagan.
0:17:49 The lesson? Elections have consequences. Setting aside whatever grievances Trump
0:17:54 may hold against specific tech and media companies, the perception is that his
0:18:00 administration will likely be more friendly to M&A. Some predictions regarding who will be on top
0:18:10 of some big transactions? Comcast, Uber, and, see above, Musk. Also, I believe someone will take
0:18:19 Intel and/or Boeing private. Prediction number 12. Tech movement, banning phones.
0:18:27 When we look back on this age, the thing we’ll regret most is letting our kids become addicts.
0:18:33 The substance is social media. The delivery mechanism is the phone.
0:18:45 On a typical day, a teen receives 237 notifications. One study found that 97% of kids
0:18:51 use their phone during school hours for a median of about 43 minutes per day.
0:18:59 Think about that. Basically, every teen in America misses 10% of school every day.
0:19:06 Giving students unrestricted access to phones has been a great move, said no teacher ever.
0:19:14 Banning them in school is a return to sanity. The good news, 18 states have passed laws
0:19:19 restricting the use of phones in school, and roughly three-quarters of schools
0:19:25 have policies restricting their use in the classroom. Better news? Our response,
0:19:36 while slow, is bipartisan. Best news? Test scores have improved by 6% in schools that have banned phones.
0:19:48 Prediction number 13. Chemical testosterone. Women are ascendant, something to celebrate,
0:19:55 while young men are struggling. There has never been a cohort that’s fallen further
0:20:04 faster than young men living in Western democracies. The percentage of young men aged 20 to 24,
0:20:11 who are neither in school nor working, has tripled since 1980. Workforce participation
0:20:19 among men has fallen below 90%, while median hourly wages are $3 less per hour adjusted for
0:20:29 inflation than they were in 1970. This is deadly. Over the past 20 years, America’s incremental
0:20:38 deaths of despair totaled 414,000, exceeding the 407,000 Americans killed in World War II.
0:20:47 It’s also a mating crisis, as women traditionally mate horizontally and up socioeconomically,
0:20:55 whereas men mate horizontally and down. When the pool of horizontal and up young men shrinks,
0:21:01 there are fewer mating opportunities. And without the guardrails of a relationship,
0:21:10 young men behave as if they have no guardrails. Families feel this. I believe the 2024 election
0:21:15 was about struggling young people, especially struggling young men. If your son is in the
0:21:21 basement vaping and playing video games, you don’t really care about trans rights or Ukraine,
0:21:28 you just want change, i.e. chaos and disruption. The Trump campaign saw this and flew into the
0:21:38 manisphere with coarse language, crypto, Rogan, UFC, and Hulk Hogan. Trump gained 15% with young men,
0:21:46 the biggest pivot from Democrats to Republicans of any age group. Another big shift was among women
0:21:55 aged 45 to 64. I believe those are the mothers of struggling young men. America elected President
0:22:03 T. The T stands for testosterone. The election was supposed to be a referendum on women’s rights.
0:22:17 It was instead a referendum on failing young men. Prediction number 14. 2025 will be a great year
0:22:26 for you. How do I know this? A, I don’t. However, I do really hope your year is full of prosperity
0:22:33 and time with loved ones. I’ve read that if you write down a goal, it’s 40% more likely to happen.
0:22:40 And I’ve done this. See two sentences ago. So we have that going for us.
0:22:56 Life is so rich.
As read by George Hahn.
2025 Predictions
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