Author: The Prof G Pod with Scott Galloway

  • How Regret Motivates Us — with Daniel Pink

    AI transcript
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    0:01:53 – Episode 329, 329 is the area
    0:01:56 of belonging to the Hudson Valley region of New York.
    0:02:00 In 1929, the Museum of Modern Art, MoMA,
    0:02:02 opened a New York City true story.
    0:02:04 I posed nude for my art class.
    0:02:06 Problem was, they didn’t ask me.
    0:02:11 – Go, go, go!
    0:02:14 (upbeat music)
    0:02:22 – Welcome to the 329th episode of the Prop G Pod,
    0:02:23 the Dugs on Vacation.
    0:02:26 That’s right, I’m in a field running.
    0:02:28 So in place of our regular schedule programming,
    0:02:30 we’re sharing a conversation with Daniel Pink,
    0:02:32 the author of various bestselling books,
    0:02:35 including The Power of Regret and When,
    0:02:37 as well as the number one New York Times bestseller,
    0:02:39 Drive, and To Sell Is Human.
    0:02:42 We discuss with Daniel Regret, human motivation,
    0:02:45 and his Washington Post column, Why Not?
    0:02:48 He’s a great storyteller, interesting concepts.
    0:02:50 It’s kind of, it’s like if Ted exploded
    0:02:53 or if Ted was personified, I think it’d be Daniel Pink.
    0:02:58 Anyways, with that, here’s our conversation with Daniel Pink.
    0:02:59 – So let’s press right into it.
    0:03:03 You wrote a book about regret, The Power of Regret.
    0:03:05 You said that the advice you give us
    0:03:08 to stay positive, look ahead, and never dwell on the past,
    0:03:10 which is harmful, why?
    0:03:13 – Because we have completely misunderstood
    0:03:15 this emotion of regret.
    0:03:16 We’ve been told, as you mentioned,
    0:03:19 that we should be positive all the time, never be negative,
    0:03:20 we should look forward, not back,
    0:03:22 and that’s bad advice, it goes against the science.
    0:03:24 It will, what the science tells us is that
    0:03:29 if we don’t ignore regrets, and don’t wallow in our regrets,
    0:03:32 but confront them, think about them, look them in the eye,
    0:03:33 it’s a transformative emotion.
    0:03:35 It helps us in a variety of ways.
    0:03:37 – Well, that makes sense.
    0:03:41 I don’t, my struggle is, I make mistakes every day,
    0:03:44 and I can’t forget myself, and I don’t know if that’s regret,
    0:03:47 but where does regret become unhealthy
    0:03:48 in a source of depression
    0:03:49 where you can never get out of the past?
    0:03:51 – Well, I mean, there’s a big difference,
    0:03:52 so when it’s a source of depression,
    0:03:53 that’s a medical issue.
    0:03:56 What I’m writing about here, I’m not a doctor,
    0:04:00 so I can’t opine on the medical dimensions of it.
    0:04:01 Essentially what we should be doing,
    0:04:03 and I think there is some relation,
    0:04:06 and how the scientific ways to deal with regret
    0:04:10 are actually very similar to cognitive behavior therapy,
    0:04:13 which is essentially not looking at your emotions
    0:04:17 as who you are, but as something that is going on,
    0:04:18 as something that is going on in your life,
    0:04:20 that is to examine them,
    0:04:22 and so when you’re talking about reckoning with regret,
    0:04:26 one of the first steps is something called self-compassion,
    0:04:29 and self-compassion is in some ways a triangulation
    0:04:32 between self-esteem and self-flagellation.
    0:04:35 We tend to believe that lacerating self-criticism
    0:04:38 is the way to get us to perform better,
    0:04:39 and there’s no evidence of that.
    0:04:41 There’s also very little evidence
    0:04:43 that kind of constantly patting yourself on the back
    0:04:44 and boosting your self-esteem is good.
    0:04:47 What seems to be good is the work that Kristin Neff
    0:04:49 has done at University of Texas on self-compassion,
    0:04:51 which is essentially treating yourself with kindness
    0:04:55 rather than contempt, recognizing that mistakes,
    0:04:57 setbacks, or regrets are part of life,
    0:04:59 and then using that as a stepstone
    0:05:01 to thinking about your regrets.
    0:05:04 One of the things we see in the research on self-compassion
    0:05:06 is that people have a very, many people,
    0:05:07 particularly high achieving people,
    0:05:09 have a very difficult, they talk to themselves
    0:05:11 in ways they would never talk to anybody else.
    0:05:14 So if I were probably to harness your self-talk, all right,
    0:05:17 we were to use those headphones you’re wearing now
    0:05:20 and create this magical thing that allows me
    0:05:22 to hear what you’re saying to yourself,
    0:05:24 especially in the face of a mistake.
    0:05:26 It would probably be brutal.
    0:05:27 It would probably be lacerating.
    0:05:29 It would probably be cruel.
    0:05:31 And chances are you wouldn’t say that to somebody else.
    0:05:33 And so what the research on self-compassion tells us
    0:05:35 is don’t treat yourself better than anybody else,
    0:05:37 but don’t treat yourself worse than anybody else
    0:05:39 because it’s not effective.
    0:05:41 – So all this just makes all sorts of sense, right?
    0:05:44 I’ve always said that one of my things,
    0:05:47 it’s like three of my last five new year’s resolutions
    0:05:49 have been to forgive myself.
    0:05:52 What is the actual cognitive behavior of the exercise
    0:05:54 is to get better than this?
    0:05:56 You logically, it is impossible rationally,
    0:05:58 logically not to agree with you.
    0:06:00 What are the actual behavioral modification techniques
    0:06:01 for getting there?
    0:06:02 – I’ll give you an example, okay?
    0:06:04 ‘Cause this goes to some of the other ways
    0:06:06 that we deal with regret.
    0:06:09 What seems to be a very effective technique
    0:06:11 on a whole range of things
    0:06:13 is what’s known as self-distancing.
    0:06:17 There’s a psychological phenomenon known as
    0:06:20 Solomon’s paradox, which is that we human beings
    0:06:21 are pretty good at solving problems,
    0:06:23 but we tend to stink at solving our own problems
    0:06:25 ’cause we’re too close to them.
    0:06:28 So a way to be more compassionate to yourself
    0:06:30 is to say what you would say to someone
    0:06:33 who is telling you what you’re telling yourself.
    0:06:35 So if you had a friend who was telling themselves,
    0:06:37 you’re an idiot, you’re an imposter,
    0:06:39 you don’t deserve to be here, you’re worthless.
    0:06:41 What would you say to that person?
    0:06:45 I mean, what would you say to that person?
    0:06:47 – You’d say for God’s sake, stop it
    0:06:51 and list off some positive metrics.
    0:06:53 – That’s the kind of thing they can say to yourself.
    0:06:55 There are other great self-distancing techniques.
    0:06:57 There’s one of the best decision-making
    0:07:01 self-distancing techniques is when you’re stuck on a decision
    0:07:04 is to ask yourself, what would I tell my best friend to do?
    0:07:08 That’s a great, very specific, practical tip.
    0:07:10 In a business setting, you can use
    0:07:11 the old Andy Grove technique,
    0:07:14 where he said when he faced a tough decision
    0:07:16 back when he was the CEO of Intel,
    0:07:19 he would ask himself, if I were replaced tomorrow,
    0:07:21 what would my successor do?
    0:07:22 And he almost always knew.
    0:07:25 And so the idea here in the research on self-distancing
    0:07:29 is that when we tackle our own problems, our own issues,
    0:07:31 we tend to look at them like scuba divers.
    0:07:33 And what we should be doing is looking at them
    0:07:36 like oceanographers, getting above them.
    0:07:37 And there are ways to do that.
    0:07:39 There’s research showing that actually
    0:07:41 you can improve your performance.
    0:07:43 If you want to talk about self-talk,
    0:07:46 you can improve your performance by talking to yourself
    0:07:49 in the second person or the third person.
    0:07:50 Instead of asking yourself, what should I do?
    0:07:51 Say, what should you do?
    0:07:53 Or better, what should Scott do?
    0:07:55 – In an effort to understand the difference between
    0:07:57 unproductive and productive regret,
    0:08:00 have you been able to reverse engineer,
    0:08:01 productive or unproductive regret
    0:08:04 of any sort of identity or experience, gender,
    0:08:07 the way you were raised, your approach to life?
    0:08:08 – Not really.
    0:08:11 I can answer that question in two different ways.
    0:08:12 Number one is that for this book,
    0:08:14 what I did is I did two things.
    0:08:17 I did the largest public opinion survey ever conducted
    0:08:19 on American attitudes about regret.
    0:08:23 Trying to identify whether there were demographic differences
    0:08:26 in how people experience regret or what they regretted.
    0:08:29 So looking at everything from race, from education level,
    0:08:32 even things like introversion, extraversion,
    0:08:34 belief in God, et cetera, et cetera.
    0:08:36 The one demographic difference that came out
    0:08:41 in this public opinion research had to do with age.
    0:08:45 And what it showed is that people in their 20s
    0:08:49 had about equal numbers of regrets of action and inaction.
    0:08:51 That is in the architecture of regret.
    0:08:52 You can regret something you did,
    0:08:54 you can regret something you didn’t do.
    0:08:56 People in their 20s had roughly equal numbers
    0:08:58 of regrets of action and inaction.
    0:09:02 But as people age, the inaction regrets take over.
    0:09:06 When you get to be in your 40s, certainly 50s, 60s, 70s,
    0:09:08 inaction regrets, outnumber action regrets
    0:09:10 by three and a half, four to one.
    0:09:13 So that’s a big difference in the content
    0:09:15 of what people regret.
    0:09:16 But when you look at things like,
    0:09:18 do men and women have different regrets?
    0:09:21 There’s some evidence, there’s modest evidence
    0:09:22 showing some differences.
    0:09:25 In my research, I saw a tiny little bit,
    0:09:26 not that much on race.
    0:09:28 A little bit on education level.
    0:09:33 I found that people with large amounts of formal education
    0:09:35 actually had more career regrets
    0:09:37 than people with less formal education,
    0:09:39 which sort of is superficially surprising,
    0:09:41 but perfectly understandable
    0:09:43 because if you have more education,
    0:09:44 you have more opportunities,
    0:09:46 which means you have more opportunities foregone.
    0:09:48 And so the demographic differences
    0:09:51 in what people regret were not massive.
    0:09:54 Now, I also did a piece of qualitative research
    0:09:56 where we collected regrets from 26,000 people
    0:09:58 around the world.
    0:10:00 And there I found that around the world,
    0:10:03 people seem to have the same four core regrets.
    0:10:07 They go deeper than simply a regret about a career,
    0:10:09 a regret about romance, a regret about health,
    0:10:11 a regret about finance,
    0:10:15 go deeper than those surface domains of life.
    0:10:16 – Are these the four you’re talking about in your book,
    0:10:18 “Foundation, Boldness, Moral, and Connection?”
    0:10:19 Can you say more about those?
    0:10:20 – Sure, sure.
    0:10:23 So again, we have this pretty remarkable database
    0:10:27 of regrets from 134 countries.
    0:10:30 The survey was up in Chinese, it was up in Spanish,
    0:10:31 and obviously it was up in English.
    0:10:34 And the four regrets that people around the world
    0:10:37 seem to have are exactly, as you say, foundation regrets.
    0:10:40 Small decisions people make early in life
    0:10:42 that accumulate to terrible consequences later in life.
    0:10:46 I spent too much and saved too little, and now I’m broke.
    0:10:47 I didn’t exercise or eat right,
    0:10:49 and now I’m profoundly out of shape.
    0:10:51 So that’s a foundation regret.
    0:10:54 Boldness regret is a very big category of regret.
    0:10:56 You’re at a juncture in your life and you have two choices.
    0:10:59 You can play it safe, or you can take the chance.
    0:11:03 And overwhelmingly, when people don’t take the chance,
    0:11:04 they regret it.
    0:11:04 Now, that’s not true for everybody.
    0:11:06 There are plenty of people who take a chance
    0:11:08 and it goes south on them and they regret it.
    0:11:12 But they are massively outnumbered
    0:11:14 by people who didn’t take the chance.
    0:11:16 And again, what’s interesting here
    0:11:18 is that it doesn’t matter the domain.
    0:11:20 So I have hundreds of people who regret
    0:11:22 not asking somebody out on a date.
    0:11:24 Hundreds of people who regret not traveling,
    0:11:26 not starting a business, not doing something
    0:11:28 that required a little bit more boldness
    0:11:31 than they were willing to offer up at the time.
    0:11:34 Third category, moral regrets.
    0:11:35 Another time when you have a choice.
    0:11:38 I can take the low road, I can take the high road.
    0:11:40 I can do the right thing, I can do the wrong thing.
    0:11:43 And overwhelmingly, most people most of the time
    0:11:46 regret doing the wrong thing.
    0:11:49 Because most people are decent
    0:11:50 and most people want to be decent
    0:11:53 and most people feel crappy when they’re not decent.
    0:11:54 And the final one are connection regrets
    0:11:56 which are about relationships
    0:11:57 and not only romantic relationships
    0:12:01 but the full spectrum of relationships in our lives.
    0:12:04 So you’ve got a relationship that was intact
    0:12:05 or should have been intact.
    0:12:06 Say with a friend or with a sibling
    0:12:10 or with a parent or whoever and it comes apart.
    0:12:13 And in many cases, the way these relationships come apart
    0:12:16 is unexciting and undramatic.
    0:12:18 They just kind of drift apart.
    0:12:20 Somebody wants to reach out.
    0:12:23 They don’t because they think it’s gonna be awkward
    0:12:26 and they think the other side’s not gonna care.
    0:12:27 So it drifts apart even more.
    0:12:29 And so those are the four regrets.
    0:12:31 Foundation regrets have only had done the work.
    0:12:33 Boldness regrets have only had taken the chance.
    0:12:36 Moral regrets have only had done the right thing.
    0:12:38 And connection regrets, if only had reached out.
    0:12:41 And it’s remarkable consistency all over the world
    0:12:44 in the way people talk about these regrets
    0:12:46 these regrets and the content of their regrets.
    0:12:48 – I love this type of research.
    0:12:49 In addition to yours, I read a lot of
    0:12:51 what my colleague at NYU, Adam Alter,
    0:12:54 has written about palliative care and end of life.
    0:12:55 And it foots to everything you’re saying.
    0:12:58 The only thing we haven’t talked about
    0:12:59 and it’s sort of a mix of all of them
    0:13:03 or an alchemy of all of them is that people,
    0:13:05 the number one regret I’ve read
    0:13:07 is that people wish they’d been less hard on themselves.
    0:13:09 They’d wish they’d forgiven themselves.
    0:13:11 And that is one of my favorite sayings
    0:13:13 that’s gotten me through a lot of hard times
    0:13:15 is nothing is ever as good or as bad as it seems.
    0:13:17 And that when you look back on your life,
    0:13:20 you won’t be as upset about the thing that happened to you.
    0:13:22 You’ll be upset about how you responded to it.
    0:13:23 Your thoughts?
    0:13:25 – I think that’s generally right.
    0:13:28 I mean, that is essentially the underlying philosophy
    0:13:31 of the underlying theory of cognitive behavior therapy,
    0:13:32 which is basically how you respond to it.
    0:13:36 It’s also essentially an element of stoic philosophy,
    0:13:39 which has become incredibly popular now.
    0:13:42 And so, I mean, the other thing, I mean, also, you know,
    0:13:44 I think what’s interesting about these regrets
    0:13:47 is interviewing people about their regrets
    0:13:50 is that when people tell you what they regret the most,
    0:13:51 they’re telling you what they value the most.
    0:13:54 And so, what we know from these four regrets
    0:13:56 is that people value stability.
    0:13:58 They value growth and learning
    0:14:00 and not wasting their time on the planet.
    0:14:02 They value goodness and they value love.
    0:14:04 And I think that’s very consistent
    0:14:07 with some of the other research we know
    0:14:10 on that we have on human flourishing,
    0:14:12 part of which tells us that ultimately
    0:14:17 at the end of our lives, what’s gonna matter to us
    0:14:20 is did we have people in our lives who loved us
    0:14:21 and did we love other people?
    0:14:23 Period, full stop.
    0:14:24 I mean, if you look at the research,
    0:14:26 if you look at the grant study at Harvard,
    0:14:30 this lengthy, multi-decade, longitudinal study
    0:14:33 of human flourishing, that’s what it shows.
    0:14:35 And I think what’s interesting about this research
    0:14:39 on regret and in general is also to your point, Scott,
    0:14:42 is most decisions we make in a given day
    0:14:45 don’t really matter all that much.
    0:14:46 And I think this is why it’s important
    0:14:48 to think about our regrets.
    0:14:50 You probably made a hundred decisions yesterday
    0:14:53 and it’s today and you don’t remember most of them.
    0:14:56 But there are decisions and indecisions that you made,
    0:14:58 that we made, human beings made,
    0:15:02 each of us a year ago, five years ago, 10 years ago,
    0:15:04 20 years ago, that not only do we remember them
    0:15:07 when we don’t remember most decisions we made yesterday,
    0:15:09 not only to remember a decision or indecision
    0:15:12 from 20 years ago, but it bugs us.
    0:15:13 That’s a very strong signal.
    0:15:14 That’s telling us something.
    0:15:15 And so we have a choice.
    0:15:17 We can either plug our ears and say,
    0:15:19 nope, I’m gonna be positive all the time.
    0:15:22 Or we can say, oh my God, I’m the worst person in the world
    0:15:23 and let it topple us.
    0:15:25 Or we can say, huh, that’s interesting.
    0:15:27 That’s a pretty strong signal.
    0:15:28 Let me listen to this signal.
    0:15:30 Let me use it as data.
    0:15:32 And when we do that, there’s a lot of evidence
    0:15:33 showing that regret can help us
    0:15:35 on a whole range of different things.
    0:15:37 It can help us become better negotiators,
    0:15:40 better problem solvers, avoid cognitive biases,
    0:15:43 strategize better, find more meaning in life.
    0:15:46 We’ll be right back.
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    0:17:54 (bell rings)
    0:17:56 – Hamburglar, why are you calling?
    0:17:57 – Rubble, rubble.
    0:18:00 – McDonald’s has a new biggest burger called Big Arch,
    0:18:03 made with two 100% Canadian beef patties,
    0:18:04 a new delicious sauce,
    0:18:06 and all the McDonald’s flavors you love,
    0:18:08 and wait, you want me to help you get it?
    0:18:09 – Rubble.
    0:18:10 – Come on.
    0:18:13 Compared to beef burgers on McDonald’s current menu
    0:18:15 at participating restaurants in Canada.
    0:18:22 – I think of you as the motivation guy.
    0:18:24 I first came across your work.
    0:18:26 I was excited that you were great to come on the pod
    0:18:29 ’cause I remember literally 10 or 15 years ago,
    0:18:33 I stumbled upon this video where you used an animation
    0:18:36 to kind of brilliantly and succinctly,
    0:18:39 I’m sure you know the video, it went everywhere.
    0:18:42 And I feel like that was sort of an inflection point for you.
    0:18:45 You became kind of owned motivation.
    0:18:47 Your book drive the surprising truth
    0:18:49 about what motivates us.
    0:18:51 I loved the way you broke it down,
    0:18:54 autonomy, mastery, and purpose.
    0:18:56 Can you say more about those three pillars
    0:18:58 of the motivation stool?
    0:19:01 – Sure, I mean, what we know about especially motivation
    0:19:05 at work is that we sort of have this head fake going on.
    0:19:07 We think that a certain kind of reward,
    0:19:09 what I call if then rewards,
    0:19:11 are the secret to effective motivation.
    0:19:12 If you do this, then you get that.
    0:19:14 If you do this, then you get that.
    0:19:16 And we have now 60 years of research showing us
    0:19:20 that if then rewards are pretty good for simple tasks
    0:19:21 with short time horizons,
    0:19:24 but not that effective for complex tasks with long horizons.
    0:19:26 And that for complex tasks with long horizons,
    0:19:28 what we wanna do in the workplace especially
    0:19:29 is pay people well.
    0:19:32 And then as you say, offer them those three things.
    0:19:34 Autonomy, mastery, and purpose.
    0:19:37 So autonomy is, do you have some control
    0:19:39 over what you do, how you do it,
    0:19:41 when you do it, where you do it?
    0:19:42 The mastery is, are you getting better
    0:19:43 at something that matters?
    0:19:46 Are you making progress in something meaningful?
    0:19:48 And purpose is, do you know why you’re doing it?
    0:19:50 Are you making a difference in the world?
    0:19:53 Are you making a contribution in your own little terrain?
    0:19:54 And those are the things
    0:19:57 that actually lead to enduring motivation.
    0:20:00 These if-then rewards are like,
    0:20:02 it’s like, you can keep shoveling coal into the furnace,
    0:20:04 but it burns up pretty quickly.
    0:20:07 And but these, if these autonomy, mastery, and purpose,
    0:20:11 which form sort of the trifecta of intrinsic motivation,
    0:20:15 lead to enduring high performance.
    0:20:18 – And what are the enemies of motivation?
    0:20:20 I was default to the word now.
    0:20:21 You wanna write a book, just start.
    0:20:23 So many people come up to me.
    0:20:25 I wanna start a podcast.
    0:20:25 I wanna write a book.
    0:20:27 I’m like, okay, start.
    0:20:30 Other than that, I don’t know what advice to give you.
    0:20:32 What are the killers of motivation?
    0:20:34 – Well, I mean, there are all kinds
    0:20:35 of killers of motivation.
    0:20:37 I mean, part of what it, part of it is,
    0:20:40 I mean, what you’re talking about in a way is procrastination,
    0:20:43 which is a problem of emotional regulation.
    0:20:46 They sort of have this in co-ed desire to write a book,
    0:20:48 but they don’t wanna deal with the discomfort
    0:20:50 of sitting down and writing the first sentence,
    0:20:52 because that’s really painful.
    0:20:54 And so I actually think that your advice
    0:20:56 to just start is right.
    0:20:58 I think what you wanna do is you wanna try to change,
    0:21:00 you wanna offer people some scaffolding
    0:21:01 and some structuring on that.
    0:21:06 So if you wanna write a book and is set out
    0:21:09 in your calendar today, 15 minutes to start writing,
    0:21:11 and then do 15 minutes tomorrow,
    0:21:14 and then do 15 in your calendar, 15 minutes the next day,
    0:21:15 and then expand that.
    0:21:18 And over and over and over, that’s how you write books.
    0:21:19 I mean, I’ve written seven books.
    0:21:21 You think if I were to have waited
    0:21:25 until I was inspired to start writing,
    0:21:26 I wouldn’t have written a word.
    0:21:29 I’ve written, I was able to, I’m able to write books
    0:21:30 because I care about what I’m writing,
    0:21:34 but also because I show up in my office at 8.30
    0:21:35 and write and do my job.
    0:21:38 And then I do it the next day, and the next day,
    0:21:38 and the next day.
    0:21:40 And I do it even on the days
    0:21:41 that I don’t feel like doing it.
    0:21:43 I do it on the days,
    0:21:44 especially on the days that I don’t feel like doing it.
    0:21:47 It’s like the famous Julius Irving quotation.
    0:21:50 It’s like being a professional is doing what you love to do
    0:21:52 even on the days you don’t feel like doing it.
    0:21:53 – Let’s talk about that.
    0:21:54 What is your process?
    0:21:56 It sounds like you go into an office,
    0:21:58 but when you’re writing a book,
    0:22:00 that’s kind of, I think what you’re known for,
    0:22:02 what’s your process?
    0:22:03 You’ve written seven books.
    0:22:06 How do you, is there, could you offer anyone some structure
    0:22:08 around how you get these things done?
    0:22:11 – I look at writing books like a blue collar job.
    0:22:13 I think of it as being a bricklayer.
    0:22:16 And so what I do in terms of the actual execution
    0:22:21 of the book is I’m talking to you from my garage office.
    0:22:23 I live 22 steps in that direction.
    0:22:24 I’m in Washington DC.
    0:22:26 This is my garage office, all right?
    0:22:30 Pinking World Headquarters is a converted one car garage.
    0:22:32 And at 830 in the morning when I’m writing a book,
    0:22:35 I come into this office and I give myself a word count.
    0:22:38 It varies depending on where I am in the process,
    0:22:41 but I’ll give myself a word count, 600 words, 700 words.
    0:22:43 I don’t bring my phone with me in the office.
    0:22:45 I don’t open up my email.
    0:22:47 I don’t watch ESPN highlights.
    0:22:50 I don’t do anything until I hit that number.
    0:22:52 And then when I hit that number,
    0:22:54 I’m liberated to do other stuff.
    0:22:56 But nothing until I hit that number.
    0:22:58 Some days I hit that number at 1030, 11.
    0:23:00 Other days I don’t hit it ’til late in the afternoon
    0:23:02 and those are crappy days.
    0:23:04 But I don’t do anything until I hit that number.
    0:23:06 And then I do it the next day.
    0:23:09 And then I do it the next day.
    0:23:12 So if you wanna have process, it’s not anything exalted.
    0:23:14 It’s not like I sit in the corner over here
    0:23:15 with a smoking jacket on,
    0:23:19 listening for God to dictate sentences to me.
    0:23:24 No, I show up in my workspace and I do my work.
    0:23:27 – Your dad, my understanding is two daughters and a son.
    0:23:30 What is your work on motivation and regret?
    0:23:33 How does that change your approach to parenting?
    0:23:36 – You know, I think I’m a pretty autonomy supportive parent
    0:23:39 to use that kind of technical language.
    0:23:41 So I try to support my kids autonomy.
    0:23:45 So not be too directive about what they have to do.
    0:23:49 Now, the underlying fact here is that,
    0:23:51 I mean, we have 50 years of evidence
    0:23:53 that the effect of parenting on kids,
    0:23:55 especially their intellect and their personality
    0:23:57 is very small.
    0:24:01 So, you know, the unhappy fact of genetic research
    0:24:06 for many parents is that identical twins raised apart
    0:24:11 are more similar in intelligence and in personality
    0:24:14 than fraternal twins raised together.
    0:24:17 So, you know, arguably the most important things
    0:24:19 that a parent gives a kid, in my view,
    0:24:24 especially in America, are genes and a zip code.
    0:24:25 If you look at the work of Raj Chetty,
    0:24:27 the most important thing a parent gives a kid
    0:24:28 are genes and a zip code.
    0:24:31 Now, again, when we’re talking only about their outcome,
    0:24:34 I mean, you know, I gave my kids genes
    0:24:36 and I gave my kids a zip code,
    0:24:37 but more important than anything else,
    0:24:39 I love them more than anything in the world.
    0:24:40 And whether that has an effect on their outcome,
    0:24:44 I don’t know, but, you know, it’s what parents do.
    0:24:46 But I think a lot of parents are mistaken
    0:24:50 about how much control, how much effect they have
    0:24:53 over who their kids become.
    0:24:54 – And what about being a good partner?
    0:24:56 What about being a good husband?
    0:24:57 – When it comes to regret,
    0:24:59 I think it’s really important to talk to your partner
    0:25:02 or even your kids about your own regrets.
    0:25:05 That is, a lot of times people sit with their regrets.
    0:25:07 They think that somehow they’re the only one
    0:25:10 who doesn’t have, who has those regrets.
    0:25:13 And we have ample evidence showing
    0:25:14 that writing about your regret
    0:25:17 or talking about your regret, it can be quite effective
    0:25:19 because it’s an unburdening, it’s a sense-making.
    0:25:21 And the other mistake that we make,
    0:25:23 this is true not only with our kids and with our partners,
    0:25:26 but out there in the world is that we mistakenly believe
    0:25:29 that when we talk about our mistakes or our scrubs
    0:25:32 or our setbacks, that people will think less of us.
    0:25:34 When in fact, we have some good evidence
    0:25:36 that people think more of us,
    0:25:37 that they admire our candor, they admire our courage.
    0:25:39 So I think one thing you can do with partners
    0:25:41 and with kids is talk about your regret,
    0:25:42 but not in a self-ladulating way.
    0:25:45 Talk, you know, say, here’s something I regret.
    0:25:46 Here’s what I learned from
    0:25:47 and here’s what I’m gonna do about it.
    0:25:48 And that’s a good way to normalize it
    0:25:50 and it’s a good way to treat regret
    0:25:54 as facts, as information, as signal, as data.
    0:25:55 That’s really the key.
    0:25:57 – We have a lot of young people to listen to the pod.
    0:26:00 And I look at, you know, I look at your life
    0:26:03 and it strikes me doing something really cool,
    0:26:06 really interesting, you make a good living.
    0:26:08 Can you provide any advice around
    0:26:10 in terms of your lived experience
    0:26:12 when you were a younger man?
    0:26:14 What did you do well?
    0:26:15 What did you not do well?
    0:26:17 If for someone out there who thinks
    0:26:19 I wanna be a great storyteller
    0:26:20 and make a really good living at it.
    0:26:22 I wanna be Daniel Bank.
    0:26:26 Like, what advice would you give to someone
    0:26:27 maybe avoiding some of the mistakes
    0:26:28 or maybe getting there?
    0:26:29 Although you’ve gotten there pretty quickly.
    0:26:31 What advice would you have for someone who says
    0:26:33 I wanna be the next Daniel Bank?
    0:26:36 – I would say get a better goal than that for starters.
    0:26:40 Because that is, I don’t know, that is a terrible goal.
    0:26:42 Being another Scott Gallagher,
    0:26:45 being another ex as a terrible, awful goal.
    0:26:47 I would say that with a degree of harshness.
    0:26:49 I would say, you don’t wanna be the next blank,
    0:26:50 you wanna be the first you.
    0:26:53 Beyond that, you know, among the things that I’ve,
    0:26:54 some of the things that I did right
    0:26:57 and some of the things that I did wrong.
    0:26:59 Among the things that I did right
    0:27:03 were that at a certain point, young in my life,
    0:27:04 relatively young in my life,
    0:27:08 I kind of stopped caring about what people thought about me.
    0:27:09 And I felt that earlier in my life,
    0:27:12 I was fairly concerned about what people thought about.
    0:27:12 Did they think I was cool?
    0:27:13 Did they think I was smart?
    0:27:15 Did they think I was accomplished and so forth?
    0:27:19 And then I came to this startling revelation
    0:27:20 about what people thought about me.
    0:27:23 And that was, they weren’t thinking about me.
    0:27:24 Nobody was thinking about me
    0:27:26 ’cause everybody’s thinking about themselves.
    0:27:28 And so, that was like a great liberating moment.
    0:27:29 So don’t think too much.
    0:27:31 Don’t think, don’t care about what other people think.
    0:27:33 That’s the most important thing.
    0:27:36 I’m, you know, the rest of it, I think is pretty standard.
    0:27:38 It’s like, you know, if you outwork people
    0:27:41 and you take more shots on goal than people,
    0:27:44 than most people, you’re gonna be all right.
    0:27:47 I mean, if you don’t care what people think,
    0:27:48 you outwork them, other people,
    0:27:52 and you take more shots on goal, you’re gonna be all right.
    0:27:54 I mean, I can’t tell you how exactly it’s gonna happen,
    0:27:56 but it’s gonna be all right.
    0:27:58 The other thing that I would tell people is,
    0:28:02 forget about planning in any kind of detailed way.
    0:28:05 One of the things that I suggest that young people do
    0:28:07 is that they find, it’s Scott Galloway,
    0:28:09 they find someone who’s doing something cool,
    0:28:11 you know, someone in their 50s or whatever,
    0:28:12 who’s doing something cool,
    0:28:14 who’s doing something interesting.
    0:28:17 Oh my God, that’d be so great to have a pilot.
    0:28:18 Oh, it’d be so great to do that.
    0:28:19 And I say, talk to that person
    0:28:22 and ask them how they got there.
    0:28:26 And I say, I guarantee you that 49 out of 50
    0:28:28 interesting accomplished people
    0:28:29 answer the question like this.
    0:28:32 It’s a long story.
    0:28:35 Because it was failure, it was circuitous,
    0:28:37 it was unplanned, there was serendipity,
    0:28:40 there was good luck, there was bad luck.
    0:28:44 And so, you know, if you, again, outwork,
    0:28:46 take more shots on goal, don’t care what people think,
    0:28:51 be generous, do great work, you’re gonna be fine, truly.
    0:28:52 I mean, you really are.
    0:28:54 I mean, it’s easy, you know, it’s easy to say
    0:28:57 from the vantage point of someone who was 60 years old,
    0:28:59 but it’s true.
    0:29:02 The one thing that I didn’t do well, Scott,
    0:29:06 I think I relied too heavily on myself throughout my life,
    0:29:07 especially professionally.
    0:29:09 And I never, like if someone says, who’s your mentor?
    0:29:12 I said, I don’t have a fricking mentor.
    0:29:15 I never had a great, I never had like a mentor.
    0:29:17 I know, not because like people weren’t kind
    0:29:20 and generous to me, it’s because I was sort of too arrogant
    0:29:22 to think that I needed something like that.
    0:29:24 And so, one of the things that I could have done
    0:29:28 a better job on is finding mentors,
    0:29:31 seeking advice from a wide range of people,
    0:29:34 doing a better job of working through other people
    0:29:36 rather than simply do everything on my own.
    0:29:38 That’s one thing that I could get better at
    0:29:40 in the next chapter of my life.
    0:29:43 – We’ll be right back.
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    0:32:28 You’re part of a year-long project
    0:32:32 with the Washington Post opinion section called Why Not?
    0:32:37 I want to talk about some of the ideas that your readers
    0:32:39 responded especially strongly to.
    0:32:42 The idea of paying teachers $100,000 a year,
    0:32:46 you said that left turns and the busiest intersections
    0:32:47 should be banned.
    0:32:49 And in another column, you pose the question
    0:32:51 or you suggested that on your birthday
    0:32:53 you should give other people presents.
    0:32:56 So pick any or all of them and say more.
    0:32:58 So the column, as you mentioned, is called Why Not?
    0:33:01 We take ideas that seem to be out of the realm of possibility
    0:33:02 and say, well, why not?
    0:33:06 So let’s pay teachers a minimum salary of $100,000 a year.
    0:33:07 We’re losing too many good teachers.
    0:33:09 Teachers are not respected enough.
    0:33:12 So let’s put our money where our mouth is and actually
    0:33:15 pay teachers a minimum salary of $100,000 a year.
    0:33:18 I got an amazing amount of love and amazing amount of hate
    0:33:21 from that column, which is a good sign.
    0:33:22 People saying this is the greatest idea ever.
    0:33:25 Other people saying, what are you talking about?
    0:33:26 No teacher is worth that amount of money.
    0:33:27 So that’s one.
    0:33:31 The best idea, in my view, is banning left turns
    0:33:33 in the busiest intersections in the busiest cities.
    0:33:35 And this seems nutty.
    0:33:39 But there’s a guy at Penn State, an engineer at Penn State.
    0:33:41 He’s done huge numbers of papers on this.
    0:33:43 And essentially, in the busiest intersections–
    0:33:45 first of all, in the busiest intersections,
    0:33:48 the busiest cities, we have incredible numbers
    0:33:49 of collisions.
    0:33:52 And actually, a shocking number of deaths and injuries
    0:33:56 in those particular places, it also
    0:34:02 contributes massively to pollution and climate change.
    0:34:04 And so if we just ban left turns,
    0:34:08 even if it requires some people to make three right turns,
    0:34:10 what the evidence shows is that everybody gets
    0:34:12 to where they’re going faster.
    0:34:14 Because instead of accumulating these–
    0:34:16 you’re stuck behind some– I live in Washington, right?
    0:34:18 I’m driving up Wisconsin Avenue.
    0:34:20 And there’s some schmo in front of me who’s turning left.
    0:34:22 And I’m stuck waiting behind him as he
    0:34:25 turns left onto Albemarle or wherever, all right?
    0:34:28 But if you eliminate that all the way through,
    0:34:30 people will get where they’re going faster.
    0:34:31 The math on this is inexorable.
    0:34:35 And also, we know that UPS, in its tracking software,
    0:34:38 generally requires its drivers to make three rights
    0:34:40 rather than one left because it saves massively
    0:34:41 on time and on fuel.
    0:34:43 And then there’s giving presents on your birthday rather
    0:34:46 than receiving presents on your birthday.
    0:34:48 I think it’s a nice tradition.
    0:34:50 I did it on my 60th birthday basically
    0:34:55 as a way to bomb my existential crisis attorney, 60.
    0:34:58 And so what I did is I found 90-something people in my life
    0:35:00 who I was grateful for.
    0:35:03 And I created these custom pencils
    0:35:05 because I love pencils, as you can see.
    0:35:07 See, I’m holding a pencil right here.
    0:35:11 And I gave people these set of three pink pencils
    0:35:13 with a note telling them that I valued them in my life.
    0:35:15 And I was glad to have them in my life.
    0:35:17 It was a cool, meaningful thing to do.
    0:35:22 And I sort of skated past the existential dread of that day.
    0:35:23 I like that.
    0:35:24 I just drank a lot.
    0:35:28 So they’re not mutually exclusive.
    0:35:30 There you go.
    0:35:32 Here’s a pencil as a drink stirrer.
    0:35:37 You’ve been in the media game mostly through books for a while.
    0:35:39 I’m curious, how do you see–
    0:35:41 how is the changing of the shifting media landscape?
    0:35:43 You’re technically a creator.
    0:35:46 I don’t know your presence on social media.
    0:35:49 How has the changing media landscape
    0:35:52 been good or bad for Daniel Pink?
    0:35:55 And how are you adapting what you do based on changes
    0:35:57 in the media landscape?
    0:35:57 You know what?
    0:35:58 It’s a great question, Scott.
    0:36:01 And whether it’s good or bad for me, I don’t know.
    0:36:05 I mean, it’s harder to contend with because what you have
    0:36:07 is you have this kind of perfect storm here,
    0:36:10 where the barriers to– forgive the cliche.
    0:36:12 But what you have is the barriers to entry
    0:36:14 are essentially zero to create stuff.
    0:36:19 And then the shelves on which the stuff sits are infinite.
    0:36:21 And then you have something, a device,
    0:36:23 that allows you access to all that stuff.
    0:36:26 And you carry it on your person all waking hours.
    0:36:28 That’s a big, fricking, deal.
    0:36:31 And that’s very different from when I was–
    0:36:34 when I started out 25 years ago.
    0:36:37 And so for me, I’m trying to–
    0:36:40 I spend very little time on social media.
    0:36:42 I spend very little– I just don’t like it.
    0:36:43 I don’t find it interesting.
    0:36:47 But I think that things like podcasts are extraordinary.
    0:36:51 When I promoted my first book, I did a radio satellite tour.
    0:36:56 When I promoted my last book, I did 138 podcast interviews.
    0:36:59 That’s a different media landscape.
    0:37:02 I think that video and TV is actually really, really
    0:37:03 interesting right now.
    0:37:09 So if I were to– I did a television show on a cable network
    0:37:12 eight or nine years ago, I don’t think I’d do that again.
    0:37:15 If I were to create a new television show,
    0:37:17 I would go straight to YouTube.
    0:37:18 And I think that that is–
    0:37:21 I think that’s super interesting.
    0:37:23 And so is it good for me?
    0:37:24 Is it bad for me?
    0:37:24 I don’t know.
    0:37:26 But it is for me.
    0:37:27 And so you have to deal.
    0:37:29 But it’s been a big change, I have to say.
    0:37:32 And I also think that books have changed, Scott.
    0:37:36 I think that books are not–
    0:37:38 I’m a writer.
    0:37:41 So my muscle memory, my instinct, when I have an idea,
    0:37:43 is to write a book.
    0:37:46 And I am actually trying to check that impulse,
    0:37:50 because that might not be the best vessel, the best expression
    0:37:52 of that set of ideas, that set of arguments,
    0:37:53 a set of stories.
    0:37:55 It might be something in another medium.
    0:37:56 So that’s how– it’s some of the ways
    0:38:00 that I’m trying to adapt to this new media landscape.
    0:38:02 Daniel Pink is the author of various bestselling books
    0:38:05 on a range of topics, including “Human Motivation,”
    0:38:07 “The Science of Timing,” and “Creativity.”
    0:38:10 His books include the “New York Times” bestsellers,
    0:38:12 “Power of Regret,” “A Whole New Mind,”
    0:38:15 and “When,” as well as the number one “New York Times”
    0:38:17 bestseller, “Drive.”
    0:38:19 And “To Sell Is Human.”
    0:38:22 He currently has a column with The Washington Post called
    0:38:22 “Why Not?”
    0:38:25 He joins us from– you’re in DC, is that right, Daniel?
    0:38:26 Yes, sir.
    0:38:28 So this was such a nice moment for me,
    0:38:32 because I remember seeing your video and thinking,
    0:38:33 I want to be like that guy.
    0:38:37 I just want to do cool work that inspires people.
    0:38:38 But you’re doing it now, man.
    0:38:42 Well, I know, but you and others were a big part of that.
    0:38:45 I just very much appreciate your work.
    0:38:47 And it’s had an impact on me.
    0:38:50 It’s really, quite frankly, it gave me a lot of motivation,
    0:38:51 because it was inspiring.
    0:38:53 So keep on trucking, my brother.
    0:38:54 You’re doing a great job.
    0:39:00 This episode was produced by Jennifer Sanchez and Caroline
    0:39:01 Shagren.
    0:39:03 Drew Burroughs is our technical director.
    0:39:04 Thank you for listening to “The Property Pod” from the Box
    0:39:05 Media Podcast Network.
    0:39:09 We will catch you on Saturday for “No Mercenome Alice,”
    0:39:10 as read by George Hahn.
    0:39:13 And please follow our Prop G Markets pod,
    0:39:15 wherever you get your pods for new episodes
    0:39:17 every Monday and Thursday.
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    Daniel Pink, the author of five New York Times bestselling books including Drive: The Surprising Truth About What Motivates Us and To Sell is Human: The Surprising Truth About Moving Others, joins Scott to discuss regret, human motivation, and his Washington Post column, “Why Not?”

    Follow Dan, @DanielPink.

    Subscribe to No Mercy / No Malice

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  • Airbnb’s Role in America’s Housing Crisis, How To Be a Successful Entrepreneur, and Spending Money in Your Twenties

    AI transcript
    0:00:03 Support for this show comes from Klaviyo.
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    0:00:42 – Thumbtack presents the ins and outs
    0:00:44 of caring for your home.
    0:00:47 Out, indecision, overthinking,
    0:00:50 second-guessing every choice you make.
    0:00:54 In, plans and guides that make it easy
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    0:01:09 Start caring for your home with confidence.
    0:01:11 Download Thumbtack today.
    0:01:15 – In 100 meters, turn right.
    0:01:17 Actually, no, turn left.
    0:01:19 There’s some awesome new breakfast wraps at McDonald’s.
    0:01:20 – Really?
    0:01:22 – Yeah, there’s the sausage bacon and egg,
    0:01:24 a crispy seasoned chicken one.
    0:01:26 – Mmm, a spicy end egg, worth the detour.
    0:01:28 – They sound amazing.
    0:01:29 – That they taste amazing too.
    0:01:30 (sighs)
    0:01:32 Wish I had a mouth.
    0:01:34 Take your morning into a delicious new direction
    0:01:36 with McDonald’s new breakfast wraps.
    0:01:39 Add a small premium roast coffee for a dollar plus tax.
    0:01:41 At participating McDonald’s restaurants.
    0:01:42 Ba-da-ba-ba-ba.
    0:01:46 – Welcome to the Propgy Pod’s Office Hours.
    0:01:48 This is the part of the show where we answer questions
    0:01:49 about business, big tech, entrepreneurship,
    0:01:50 and whatever else is on your mind.
    0:01:52 If you’d like to submit a question,
    0:01:55 please email a voice recording to officehours@propgmedia.com.
    0:01:59 Again, that’s officehours@propgmedia.com.
    0:02:00 Question number one.
    0:02:02 – Hi, Prof.
    0:02:03 A few weeks back,
    0:02:06 you discussed the housing crisis facing this country.
    0:02:08 You discussed a number of factors,
    0:02:10 but I did not hear you mention the impact
    0:02:15 of the sharing economy, such as Airbnb and VRBO.
    0:02:17 I live in Nashville, Tennessee,
    0:02:20 which has seen a confluence of two events.
    0:02:25 A post pandemic or post COVID population rise
    0:02:28 from residents of high tax states,
    0:02:29 such as New York and California,
    0:02:32 moving to a very low tax state here in Tennessee.
    0:02:35 And additionally, we’ve also risen
    0:02:38 as a very popular vacation destination.
    0:02:41 Both of these have contributed to our building boom,
    0:02:42 which we’re seeing here.
    0:02:44 We have a number of apartments
    0:02:46 and a number of housing units being built,
    0:02:49 but many of those are built and owned
    0:02:53 for the sole purpose of being short-term rentals.
    0:02:56 As a result, we have seen our housing prices soar.
    0:03:01 What impact are you seeing the home sharing economy
    0:03:03 have on the rest of the country?
    0:03:05 Is it similar to what we’re seeing here in Tennessee
    0:03:07 or are we just an anomaly?
    0:03:08 Thanks so much for your show.
    0:03:10 Always appreciate it.
    0:03:11 – A really thoughtful question.
    0:03:14 So disclosure, I’m a shareholder in Airbnb.
    0:03:16 There’s just no getting around it.
    0:03:18 This is an issue.
    0:03:20 Cities across the U.S., including New York and Santa Monica
    0:03:22 are cracking down on short-term rental platforms,
    0:03:25 specifically Airbnb and VRBO.
    0:03:26 So let’s look at the numbers.
    0:03:28 U.S. short-term rental market in 2023
    0:03:32 was $64 billion in revenue up from $39 billion in 2019.
    0:03:36 Vacation rental listings in the U.S. over $2.4 million
    0:03:39 and more than 785,000 hosts.
    0:03:41 And the estimated U.S. housing shortage
    0:03:44 is at least 2 million homes.
    0:03:46 Economists are divided on whether implementing bans
    0:03:48 on short-term rentals helped solve
    0:03:49 the housing affordability crisis.
    0:03:51 A 2019 Harvard Business Review study found
    0:03:55 that a 1% increase in Airbnb listings
    0:03:59 led to just a small 0.01% rise in rental prices.
    0:04:03 Airbnb’s response, short-term rentals bring money to cities
    0:04:05 through rental fees and visitor spending.
    0:04:06 They also say that most of their listings
    0:04:08 are outside typical tourist areas
    0:04:09 supporting neighborhoods that usually
    0:04:11 don’t benefit from tourism.
    0:04:12 That’s a fair point.
    0:04:14 I would say there’s contradictory forces here.
    0:04:16 The first is there’s just no getting around it.
    0:04:18 If people start taking stock that would ordinarily
    0:04:22 be used for long-term rentals and converting it
    0:04:25 to short-term rentals, then local residents
    0:04:29 see their rent or the rent on their rent go up.
    0:04:30 That makes sense.
    0:04:32 That, I see, is a transfer of wealth
    0:04:36 from residents to tourists who are looking to not–
    0:04:39 who don’t want to stay at some Joey Bagadona’s hotel
    0:04:43 in Midtown for $600 a night so they can rent a cute studio
    0:04:48 or one bedroom for $300 in Chelsea or Soho or Flatiron.
    0:04:49 So they benefit.
    0:04:53 It’s an economic arbitrage or economic transfer
    0:04:55 from residents to tourists, if you will,
    0:04:58 or from long-term renters to short-term renters.
    0:05:03 Now, to Airbnb’s point, this should create economic activity.
    0:05:06 If you reduce the friction of coming to a city
    0:05:08 and getting more people spending money and more people coming
    0:05:12 to different metros, it should create economic growth.
    0:05:15 The key is– and the hotel’s had a good point–
    0:05:17 that Airbnb should pay paying a certain amount of tax
    0:05:18 or the same tax.
    0:05:22 And then is that money being reinvested in new housing stock?
    0:05:26 The biggest problem we have in the US around housing
    0:05:27 is that we just don’t have enough supply.
    0:05:29 It’s obviously not a demand problem.
    0:05:31 It’s that it has become so difficult.
    0:05:34 I think the primary culprit around increasing
    0:05:37 rents and unaffordability around housing
    0:05:39 is, essentially, we have taken housing permits
    0:05:40 out of the hands of civic officials
    0:05:43 and put it into the hands of homeowners.
    0:05:45 What do I mean by that?
    0:05:47 If you want to build, you have to get through the local
    0:05:50 Architectural Review Board, the city planning commission.
    0:05:51 And unfortunately, these commissions
    0:05:55 are filled with current homeowners who always
    0:05:57 find reasons not to increase the housing stock.
    0:05:58 Why?
    0:06:00 Because the incentives are to limit the housing stock,
    0:06:03 such that the value of the assets they already own,
    0:06:05 their homes, increases in value.
    0:06:06 So they will listen to someone.
    0:06:08 I bought a piece of land in Florida
    0:06:09 when we were planning on developing it.
    0:06:11 And a woman showed up to the review meeting in Florida.
    0:06:15 It’s actually quite developer-friendly and said,
    0:06:17 I want a study done, or I don’t want them to develop over there
    0:06:21 because I walk my dog on that piece of property.
    0:06:24 OK, so that’s trespassing.
    0:06:26 I mean, they just delayed it another month
    0:06:30 because a woman liked to walk her dog on my land.
    0:06:33 We need economic incentives and tax rates.
    0:06:35 We need to basically weaponize the private sector
    0:06:37 and provide some sort of economic incentive
    0:06:38 to get them building again.
    0:06:40 I think this is really the problem.
    0:06:41 I don’t think it’s short-term rentals.
    0:06:42 I think they add to it.
    0:06:45 But I think taxing them and putting in place
    0:06:48 some restrictions might make sense.
    0:06:50 I’m not even sure you want to put in place restrictions.
    0:06:52 I think you just– what you want to do
    0:06:56 is let their freak flag and their capitalist flag grow.
    0:06:58 Let them do a bunch of innovation around current assets.
    0:07:01 Also, there’s a certain private property element here.
    0:07:03 And that is, if I own my place, I
    0:07:05 should be able to do pretty much whatever the fuck I want with it.
    0:07:07 The real issue here is a supply problem.
    0:07:09 We need the government to weigh in with tax subsidies
    0:07:12 and economic incentives such that builders rev up those engines.
    0:07:15 And also, we probably need some sort of regulation
    0:07:19 that makes it more difficult for civic officials
    0:07:20 that are crammed with current homeowners
    0:07:24 to weaponize the scarcity culture that we have engaged in.
    0:07:26 If I already own stocks, I’m going to create monopolies
    0:07:28 such that those stocks go up and up and up.
    0:07:30 If I already own a home, I’m going
    0:07:32 to make it harder for someone else to own a home.
    0:07:35 If I already have a degree from UCLA,
    0:07:38 because I got in with a 76% admissions rate,
    0:07:41 I like that it’s a nine because that makes the value of my degree go up.
    0:07:45 We have moved from a egalitarian society investing
    0:07:49 an opportunity to a scarcity rejectionist bullshit culture
    0:07:51 that’s about the hunger games where once I get mine,
    0:07:52 I want to make it harder for you to get yours.
    0:07:54 And housing is ground zero for that.
    0:07:56 Thanks so much for the question.
    0:07:58 Question number two.
    0:07:58 Hi, Scott.
    0:08:01 This is Cameron from Orlando, Florida.
    0:08:03 I’ve been doing relatively well in my career thus far
    0:08:07 and have been able to save and invest a substantial amount of money.
    0:08:10 I’m considering starting my own business within the next few years
    0:08:15 and was hoping you could help identify and give advice for avoiding
    0:08:19 some early pitfalls that young entrepreneurs tend to fall into.
    0:08:21 Thank you and love the show.
    0:08:22 Thanks so much, Cameron.
    0:08:23 Well, I have a lot of experience here
    0:08:25 because I’ve started a lot of companies that have failed.
    0:08:27 I’ve started some that have been successful.
    0:08:28 And the wonderful thing about America
    0:08:30 is you only need a couple successes.
    0:08:33 And if it does really well, you’re set for the rest of your life.
    0:08:35 OK, so greatness is in the agency of others.
    0:08:38 I’ve typically, until the last 10 years of my life,
    0:08:40 I had the credibility and I thought the skill to start businesses on my own.
    0:08:41 I always had a partner.
    0:08:44 I started my first business.
    0:08:46 My first business was a video rental business when I was 24.
    0:08:48 I partnered with my friend, Lee Lotus.
    0:08:50 My next business was profit brand strategy.
    0:08:54 I partnered with my business school classmate, Ian Chaplin.
    0:08:57 I typically started businesses with other people.
    0:09:00 So one, I think it’s more fun to build something with someone else
    0:09:02 and when you’re young, you want to round out your skills
    0:09:04 with someone else who has the skills you don’t have.
    0:09:07 And that’s the key, finding a partner with different skills
    0:09:08 and also being generous with each other.
    0:09:13 Nothing blows, nothing snatches defeat from the jobs of victory more
    0:09:16 than when you aren’t generous and don’t get along with your partner.
    0:09:19 It can just fuck up a company that has everything going for it.
    0:09:22 Whenever I see a good company flying apart of the seams,
    0:09:25 I know that it’s the partner’s not getting along.
    0:09:27 The first thing you got to do is find really talented people,
    0:09:29 give them a piece of the business,
    0:09:31 paint a vision for why you think it’s going to be successful,
    0:09:34 treat them well, identify the few key players in your company,
    0:09:37 your small business and nail their feet to the ground,
    0:09:39 say, “I’m going to give you 10% of this company.”
    0:09:42 My first hire, I hired students when I started L2.
    0:09:46 And my first hire, full-time hire, was a woman named Maureen Mullen.
    0:09:48 I paid Maureen $15 an hour.
    0:09:50 She had her consulting offer rescinded.
    0:09:53 This was 2008 or 2009.
    0:09:55 I started her, I think, at $15 or $20 an hour.
    0:09:57 She was so good, I said, “Look,
    0:10:00 I don’t have the money to pay you a market-competitive salary,
    0:10:01 but I’m going to give you 10% of the company.”
    0:10:05 Fast forward seven years later, we sold for $158 million.
    0:10:07 So things worked out for her.
    0:10:10 But you want to identify a core group of people and a partner,
    0:10:10 I think, early on.
    0:10:13 That’s everything, too.
    0:10:15 Revenues make a business, not expenses.
    0:10:18 I still make this mistake when I started business.
    0:10:20 I think, “Oh, I’ve got to rent an office space.
    0:10:22 I need to hire a bunch of people.
    0:10:24 I need to have nice furniture.
    0:10:26 I need to do some advertising.”
    0:10:27 Fuck that.
    0:10:28 Business is about revenues.
    0:10:30 Now, I’ve always been in services business,
    0:10:31 so don’t take a lot of capital.
    0:10:33 But don’t fall under the illusion
    0:10:36 that just because you can raise a lot of money or cheap capital,
    0:10:38 that spending it makes a business, it doesn’t.
    0:10:40 Sure, there are some businesses specifically in tech
    0:10:43 where you do need to make investments,
    0:10:46 but I’m pretty sure that every investment I made in 2021
    0:10:47 is underwater or gone to zero.
    0:10:49 Why? There was so much capital available
    0:10:51 that a wallpapered over shitty ideas
    0:10:53 and people spent too much money.
    0:10:55 What is the number one?
    0:10:59 The number one indicator of my nine businesses’ success?
    0:11:00 Was it the idea? No.
    0:11:02 I don’t know if one idea was better than the other.
    0:11:03 Was it the people?
    0:11:05 I had good people in almost all my businesses.
    0:11:06 It was the following.
    0:11:10 Did I start it during an economic boom
    0:11:12 or coming out of a recession?
    0:11:18 The companies I started at the tail end of a boom, 99, 2007,
    0:11:19 almost always failed.
    0:11:20 Everything’s expensive.
    0:11:21 People are expensive.
    0:11:23 Mediocre people cost a ton of money.
    0:11:26 Some lame systems engineer comes into your office barefoot
    0:11:30 and demands a 30% increase in salary every two months.
    0:11:31 When I started companies,
    0:11:34 when I started Profit in 1992 out of business school,
    0:11:36 we were coming out of a recession.
    0:11:40 When I started L2, it was 2009, 2010,
    0:11:41 we were coming out of the great financial recession.
    0:11:43 Those are great times to start a business.
    0:11:45 So you want to find good people.
    0:11:47 You want to make sure you don’t overspend.
    0:11:50 I think you want to over serve those first few clients.
    0:11:52 I think you need to be sort of mentally
    0:11:53 and physically resilient.
    0:11:55 I think your relationship needs to be in a good place.
    0:11:58 I think you have to work exceptionally, exceptionally
    0:12:01 hard, fair isn’t a productive word.
    0:12:04 Also, I think you need a kitchen cabinet immediately
    0:12:05 to advise you around stuff.
    0:12:08 Also, I hate to say this, you have to be ruthless
    0:12:12 when it comes to your first 10, 20, 30 employees.
    0:12:13 Everybody has to be adding value.
    0:12:14 You don’t have time to manage.
    0:12:15 You don’t have time to figure out roles.
    0:12:18 You don’t have time to put people on performance plans.
    0:12:19 People got to show up.
    0:12:21 They’ve got to be in it.
    0:12:23 I mean, they got to come to play.
    0:12:25 But all of these are really, it comes down to people,
    0:12:28 good judgment and make sure you attract a lot of people
    0:12:30 around you, greatnesses in the agency of others.
    0:12:32 Good luck and thanks for the question.
    0:12:35 We have one quick break before our final question.
    0:12:36 Stay with us.
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    0:14:09 and obtaining your SOC2 ISO 2701 certification
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    0:15:55 they communicate.
    0:15:58 Go to Grammarly.com/enterprise to learn more.
    0:16:01 Grammarly, enterprise ready AI.
    0:16:07 – Welcome back, question number three.
    0:16:10 – Hi ProfG, this is Alex from Germany.
    0:16:12 First off, thank you for the amazing work you do
    0:16:13 on the podcast.
    0:16:15 I wanted to share a bit about my current situation
    0:16:17 to get your perspective.
    0:16:18 I’m 23 years old, a student
    0:16:20 and still living at home with my mom.
    0:16:23 Next year, I’ll be spending six months in Hong Kong
    0:16:25 as part of my studies.
    0:16:27 Earlier this year, my father passed away unexpectedly
    0:16:30 and left me an inheritance of about 1.5 million euros,
    0:16:32 primarily in real estate.
    0:16:34 I also have 100K outside of that,
    0:16:37 80K in stocks and 20K in cash.
    0:16:40 Additionally, I had already saved 40K myself
    0:16:42 by living way below my means,
    0:16:44 working a lot and saving as much as possible.
    0:16:46 Even with this financial cushion,
    0:16:49 I’ve become even more frugal.
    0:16:50 My goal is to achieve financial independence
    0:16:53 by my mid-30s and that’s why I’m so much focused
    0:16:56 on investing and keeping my expenses low.
    0:16:59 But lately, I’ve started to question
    0:17:02 if this mindset is still healthy given my current situation.
    0:17:04 Should I loosen it up a little bit
    0:17:06 and allow myself to enjoy life more
    0:17:08 or is this level of discipline necessary
    0:17:10 to achieve the freedom I’m aiming for?
    0:17:12 With the new financial resources I have,
    0:17:14 I could afford to travel more
    0:17:16 or enjoy similar experiences,
    0:17:19 but I’m unsure if that aligns with my future goals.
    0:17:21 I would really appreciate your thoughts on this.
    0:17:22 Thanks again for listening
    0:17:25 and all the incredible content you share.
    0:17:27 – So first off, I’m really sorry about your dad, man.
    0:17:31 I mean, that’s just, even if you think
    0:17:33 you’re ready for it, you’re not.
    0:17:35 And also, I think it’s great you’re living with your mom.
    0:17:37 I moved back in with my mom.
    0:17:38 She and I were very close
    0:17:40 and I would imagine that you guys need each other right now.
    0:17:42 She probably needs you more than vice versa,
    0:17:44 but I think it’s really nice that you’re living with her.
    0:17:48 Boss, you’ve got your shit throw together right now.
    0:17:51 You’re 23 and granted, it was an inheritance,
    0:17:53 but a million and a half euros.
    0:17:56 You’ve already saved 100,000 euros.
    0:17:59 You have 80 in stock and 20 in cash.
    0:18:02 You’re so far ahead, both because of your good fortune
    0:18:04 and your father’s and your mother’s hard work
    0:18:08 and your approach that you’re really blessed.
    0:18:11 This is kind of the mother of all good things.
    0:18:14 I would say with a base, here’s the thing.
    0:18:16 I’m gonna encourage you to loosen up
    0:18:19 the spicket a little bit and have some fun,
    0:18:21 whether that’s going to, fuck, I don’t know,
    0:18:24 abyss with some friends or a music festival.
    0:18:27 I don’t, you know, take five, 10,
    0:18:31 maybe even 15 grand a year additional.
    0:18:34 And you know, really kind of enjoy your 20s a little bit
    0:18:36 because you’re blessed.
    0:18:40 I mean, the reality is with a million and a half euros
    0:18:42 in real estate, you’re not bulletproof,
    0:18:47 but if that grows at four or 6% a year in value
    0:18:49 from the age of 23, you’re gonna be wealthy.
    0:18:52 So I think that given the situation you’re in,
    0:18:55 to open it up a little bit and take, like I said,
    0:18:59 another 10, 15, 20,000 euros and be really smart about it,
    0:19:02 but do one, two, three really cool trips a year.
    0:19:06 I would do it on experiences.
    0:19:08 It’s weird to say this, I’m usually telling people
    0:19:10 to bring their horns in in terms of spending,
    0:19:11 but I would say at the age of 23,
    0:19:13 of course, take your mom on a trip,
    0:19:15 take your mom on a cruise or something,
    0:19:17 you know, live a little bit, let her live a little bit.
    0:19:20 All she wants to do probably is hang out with you.
    0:19:22 But yeah, a couple trips a year with some buddies,
    0:19:25 have some fun, really enjoy what it means to be 23
    0:19:28 and as remarkably blessed as you are economically.
    0:19:30 Yeah, I say open it up a little, push it out a little bit,
    0:19:33 a little bit of splash in the cash,
    0:19:36 a little bit of fling in the bling, Alex, my friend.
    0:19:39 Anyways, man, again, let me finish where I’m started.
    0:19:41 I’m sorry about your dad,
    0:19:43 but you’re obviously on a lot of other levels,
    0:19:46 especially economically, really blessed.
    0:19:48 Thanks so much for the question.
    0:19:49 That’s all for this episode.
    0:19:50 If you’d like to submit a question,
    0:19:52 please email a voice recording
    0:19:54 to officehours@propertymedia.com.
    0:19:57 Again, that’s officehours@propertymedia.com.
    0:20:00 (upbeat music)
    0:20:08 This episode was produced by Jennifer Sanchez
    0:20:09 and Caroline Shagren.
    0:20:11 Drew Burroughs is our technical director.
    0:20:12 Thank you for listening to the Prop G Pod
    0:20:14 from the Box Media Podcast Network.
    0:20:17 We will catch you on Saturday for No Mercy, No Malice,
    0:20:18 as read by George Hahn.
    0:20:21 And please follow our Prop G Markets Pod
    0:20:23 wherever you get your pods for new episodes
    0:20:25 every Monday and Thursday.
    0:20:35 [BLANK_AUDIO]
    Vietnamese translation content goes here.

    Scott discusses the impact of home-sharing companies, including Airbnb and Vrbo, on the housing affordability crisis. He then gives advice to entrepreneurs and wraps up with his thoughts on how to balance being frugal while also enjoying life in your 20s. 

    Music: https://www.davidcuttermusic.com / @dcuttermusic

    Subscribe to No Mercy / No Malice

    Buy “The Algebra of Wealth,” out now.

    Follow the podcast across socials @profgpod:

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  • Are Men Okay?

    AI transcript
    🕒
    vi
    0:00:03 (upbeat music)
    0:00:05 When you think of the most iconic logo in the world,
    0:00:06 which brand comes to mind?
    0:00:08 For me, it’s probably Nike.
    0:00:10 Their former CMO Greg Hoffman knew exactly
    Vietnamese translation content goes here.

    In place of Raging Moderates, we’re sharing an episode of The Gray Area featuring the Dawg.

    Host Sean Illing gets personal when he asks professor and podcast host Scott Galloway: What’s going on with men? There’s a growing body of evidence that men are falling behind in education, the labor market, and other areas. And when you look at the numbers on drug overdoses and deaths by suicide, it’s pretty bleak.

    Sean and Scott — both of whom are raising sons — talk about the struggles men are facing today, how parents can navigate the current moment, and the chall

    Learn more about your ad choices. Visit podcastchoices.com/adchoices

  • Prof G Markets: Google’s Quantum Breakthrough & The World Cup Goes to Saudi Arabia

    AI transcript
    🌐
    0:00:04 Support for ProfG comes from BetterHelp. Whether you’re wrapping yourself up in a great blanket
    0:00:08 or just sitting by the fire with your favorite book, it’s always worth it to take a moment to
    0:00:13 pause and get cozy. Therapy can help you find comfort and ease no matter the season. BetterHelp
    0:00:17 is the largest online therapy provider in the world, connecting you to qualified professionals
    0:00:22 via phone, video, or message chat. Find comfort this December with BetterHelp. You can visit
    0:00:30 BetterHelp.com/PROPHG today to get 10% off your first month. That’s BetterHelp.com/PROPHG.
    0:00:39 Thumbtack presents the ins and outs of caring for your home. Out, uncertainty, self-doubt,
    0:00:45 stressing about not knowing where to start. In, plans and guides that make it easy to get home
    0:00:55 projects done. Out, word art. Sorry, live laugh lovers. In, knowing what to do, when to do it,
    0:01:02 and who to hire. Start caring for your home with confidence. Download Thumbtack today.
    0:01:10 This episode is brought to you by Secret. Secret deodorant gives you 72 hours of clinically
    0:01:17 proven odor protection, free of aluminum, parabens, dyes, talc, and baking soda. It’s made with pH
    0:01:23 balancing minerals and crafted with skin conditioning oils. So whether you’re going for a run or just
    0:01:29 running late, do what life throws your way and smell like you didn’t. Find Secret at your nearest
    0:01:38 Walmart or Shoppers Drug Mart today. Today is number $400 billion. That’s Elon Musk’s record
    0:01:44 high net worth as of last week. Power corrupts and absolute power absolutely corrupts. This is
    0:01:51 terrible for society and will cause real damage to economies, justice, and democracy around the world.
    0:02:07 Welcome to Prop G Markets. Today, we’re discussing Google’s quantum breakthrough
    0:02:11 and Saudi Arabia’s World Cup. But first, here with, oh wait, banter.
    0:02:15 You can introduce me and then we can do banter. You don’t have to.
    0:02:20 Like anyone doesn’t know you? I’m so sick of everyone comes up to me. He’s like, tell Ed,
    0:02:25 we said hello. If it’s anyone young, they’re like, I love that Ed Elson. Yeah, I know. Yeah,
    0:02:29 he’s great. Love to hear that. He’s great. What are you doing, Ed? Where are you? What’s going on?
    0:02:36 I’m in New York and I’m just sort of reeling from that $400 billion net worth start. I don’t know
    0:02:43 if you realize this, but since Trump was elected, since November 5th, Elon’s net worth has increased
    0:02:50 by 66% and he’s added $4 billion to his net worth every day. Yeah, and I was excited about getting
    0:02:58 Zip Recruiter as a sponsor last week. Oh, God. And here I am selling like chewable erectile
    0:03:06 dysfunction drugs. Seriously. Oh, wait, they’re going to spend $1,100 on first-time founders.
    0:03:13 Sure, I’ll meet with them. Oh, God. It’s a good life. Oh, wait, I’m headed to Riyadh. Let’s talk
    0:03:18 about that. Let’s bring this back to me. I’m headed to Riyadh on one on Tuesday. Have you ever
    0:03:22 been to Riyadh? You haven’t been to Riyadh, right? No, no. You’re welcome to take me with you.
    0:03:28 Yeah, if you were much more interesting and I liked you more, we’d absolutely be rolling together.
    0:03:34 That’s not fair. I think you’re both interesting and likeable, but I’ve been to Dubai a bunch of
    0:03:38 times. Only been to Riyadh once and I was only there for a conference. I’m curious. I’m taking
    0:03:43 a little bit extra time and I’m going to check it out. I’m fascinated by the kingdom right now.
    0:03:47 Well, we’ll be discussing that more because we’ve got Saudi Arabia on our docket here.
    0:03:50 But let’s start off with our weekly review of market vitals.
    0:04:02 The S&P 500 declined. The dollar gained. Bitcoin hit another record
    0:04:05 and the yield on 10-year treasuries increased, shifting to the headlines.
    0:04:10 A federal judge has blocked grocery store Kroger’s acquisition of Albertson’s.
    0:04:15 The judge sided with the FTC, agreeing that the $25 billion deal would hurt consumers
    0:04:20 and limit competition. Following the judge’s ruling, Albertson’s terminated the deal
    0:04:25 and filed a lawsuit against Kroger, alleging the company didn’t do enough to secure regulatory
    0:04:31 approval. Warner Brothers’ discovery is splitting into two units, one for its streaming and studio
    0:04:37 business and another for its linear TV networks. The move paves the way for a potential spin-off
    0:04:42 or sale of its TV business and the stock popped more than 14% on the news.
    0:04:48 And finally, Eli Lilly will begin testing its GLP1 drug Zep bound next year as a treatment
    0:04:56 for drug and alcohol addiction. Eli Lilly CEO Dave Ricks described GLP1 drugs as anti-hedonics,
    0:05:03 saying they can help reduce the desire cycle. Scott, your thoughts starting with Kroger’s
    0:05:10 acquisition of Albertson’s, which was set to be one of the biggest M&A deals in history, called off.
    0:05:16 So my gut was that this was populist bullshit and I love antitrust. I love black and mergers.
    0:05:21 I’m an even bigger fan of breakups. But my fear was when you look at Albertson’s or Kroger,
    0:05:27 it’s not like these guys are lighting up the business world. This is specifically their
    0:05:32 existential threat is Amazon. I feel like this is not a great business. It’s low margin. It’s
    0:05:37 difficult. I think there’s still quite a bit of competition here. This is populist bullshit
    0:05:45 because just as diapers and gas prices kind of weigh on people’s sort of view of the world,
    0:05:48 like if gas prices go up, they get angry at the administration and if diapers are more expensive,
    0:05:56 they think, oh, this store is a ripoff. Grocery prices have become a very strong indicator for
    0:06:01 how the majority of the public feels about inflation and the administration. And so I
    0:06:08 thought it was sort of an easy target to say, no, grocery prices need to stay low. But South Dakota
    0:06:14 State University found that supermarket mergers can actually decrease prices for customers due
    0:06:19 to economies of scale. Albertson’s decreased 4% on the news, Kroger increased 5% after announcing
    0:06:24 would abandon the merger and restart stock buybacks. That’s because typically the person on top who
    0:06:29 makes the acquisition overpays only one in three acquisitions work. But I think, I don’t know,
    0:06:36 I think that the real threat is Amazon and having more formidable competitors to Amazon
    0:06:43 would create a healthier ecosystem. Yeah, I’m a little torn on this. I think the really interesting
    0:06:51 thing here is you mentioned that they’re kind of the smaller players in the market. And you’ve got
    0:06:57 Amazon and you’ve got Walmart who are crushing them. And this was Kroger and Albertson’s argument.
    0:07:02 Their argument was that this was basically the only way to compete with all the online retailers,
    0:07:06 especially Amazon. And I think they probably thought that that would work with the FTC because
    0:07:13 they know that the FTC has been going after Amazon anyway. But the FTC’s response was,
    0:07:18 okay, well, you say you want to compete with the online retailers, but you’re actually not
    0:07:23 an online retailer. You are a supermarket. And those are two very different things.
    0:07:29 And what’s interesting is that this is ultimately what the decision came down to. It was an argument
    0:07:36 over what the definition of a supermarket actually is. And the judge made her opinion very
    0:07:42 clear. And the first line of the conclusion was, quote, supermarkets are distinct from other grocery
    0:07:48 retailers. So in other words, she’s saying, you know, unlike your framing, where you guys are
    0:07:53 these little fish in this big, big pond of retail, we believe that you are in fact the
    0:08:00 big fish in the little pond of supermarkets and supermarkets and big retail are two different
    0:08:07 things. And therefore, to team up like this would be unfair. And I’ve been kind of back and
    0:08:14 forth on this because it’s really about framing. It’s like, are they dominating the supermarket
    0:08:20 business? Or are they struggling in the retail business? And that’s really what this came down
    0:08:26 to. So I’m not sure I have an opinion yet, but I do find it interesting that all of this comes
    0:08:32 down to a dispute over definitions. So I think that that argument holds water if the framing is
    0:08:38 that they’re not really competing against Amazon, they’re competing against other grocery supermarkets.
    0:08:42 But even if you say, okay, take Amazon out of the competitive set,
    0:08:49 the biggest grocery supermarket in my mind is Walmart. Right. And by the way, just the way
    0:08:54 they, their name for Walmart, it’s very interesting, they called Walmart a large format store.
    0:08:59 Whatever we call it, Walmart’s biggest category is groceries. There are still a large number of
    0:09:04 Walmart customers that primarily go there just for groceries. So call it what you want. It’s the
    0:09:11 largest grocery provider or retailer in the nation. They have a 25% share of the grocery market and
    0:09:17 combined, this company had the merger gone through or been approved would have had 11%. So okay, fine,
    0:09:20 we’re not competing against Amazon, but you’re going to tell us we’re not competing against
    0:09:27 Walmart. And Walmart with that scale, based on the most recent earnings call, is kicking the
    0:09:34 shit out of Target, much less Kroger’s and Albertson’s. And so their case is that Kroger, people,
    0:09:37 people don’t think of Walmart for groceries. They only go to this separate,
    0:09:42 this separate category of which you’re dominant players. I just don’t buy that. I think a lot
    0:09:47 of people, if Kroger’s- Plus Amazon owns Whole Foods. There you go. It’s the other side of this,
    0:09:52 too. I think if people think, oh, Walmart has the lowest prices because of their scale and
    0:09:58 their technology, I’m going to buy my groceries from Walmart and not from Kroger’s or Albertson.
    0:10:04 So based on the fact, I think they had eight and 3% market share and Walmart,
    0:10:12 distinctive Amazon has 25%. And it feels like a pretty robust sector. Let me put it this way.
    0:10:17 I think Doug McMillan is really happy to see a Walmart. He’s like, oh, God, we’re going to
    0:10:21 roll over these guys. They don’t have the capital to make the types of investments we can in
    0:10:28 technology. They don’t have the scale to turn the screws on all of our suppliers like we do.
    0:10:32 So I think they got it wrong here. I wonder if actually this one should have gone through.
    0:10:37 Yeah. I could imagine a world like 10 years from now where Walmart and Amazon absolutely
    0:10:43 dominate the supermarket and grocery business. Prices are high and we’ll look back at this
    0:10:47 moment and be like, damn, we really fucked up there. We could have prevented this. I think
    0:10:52 that’s very possible. One final note though, Wall Street never thought this was going to
    0:10:59 go through from the very beginning. So this deal was pricing Albertson’s at $34 a share.
    0:11:03 The stock’s been hovering at around $18 a share basically throughout the,
    0:11:09 from when they announced the deal to today, it’s been trading at a discount. So it is
    0:11:13 interesting that Wall Street from the get go was like, this is not going to go through.
    0:11:22 Let’s move on to Warner Brothers Discovery. This is sort of downstream of your prediction about
    0:11:28 how we’re going to see a lot of spins in the media business, specifically cable assets will be spun
    0:11:37 off to capture more value. This is a little different though, because unlike Comcast who
    0:11:40 did exactly what you said in your prediction last month, where they spun out their cable
    0:11:46 assets and do a new company, this is just a restructuring. So the cable assets are going
    0:11:50 to have their own operating division. The streaming assets are going to have their own
    0:11:55 operating division, but there’s no spin here. At least there’s no spin yet. It’s still one company.
    0:12:01 So my question for you is, what does this actually mean for shareholders? Should we be
    0:12:08 expecting a spin? And if not, does this sort of relabeling into different categories actually do
    0:12:14 much to the company? This is a preview. This is making it, he’s setting the table for a spin.
    0:12:20 And that is he’s creating distinct operating units such that the spin will be more elegant and easy.
    0:12:24 And the fact that the stock is up 15% now today is basically the market saying,
    0:12:31 oh, you’re flirting with a spin will come on over here. This means the spin, in my opinion,
    0:12:37 is going to happen. I don’t know if the spin will take some most or all the debt, but they will
    0:12:41 probably, I mean, what you have with the cable business is highly profitable businesses that
    0:12:47 can probably support a lot of debt because they’re cashflow generative. And this will free up a pure
    0:12:53 play around Warner and HBO, which will trade at a much higher stock price. And my two stock picks
    0:12:59 or my three stock picks for 2024 were Alphabet because I thought they had more IP and that it
    0:13:06 would be Revenge or the Empire Strikes Back around AI. And then Warner Brothers Discovery and Disney
    0:13:12 had been oversold. Part of the thing getting in the way of the spin, I believe, was their capital
    0:13:17 structure is a bit of a straight jacket. What do I mean by that? They have really good debt. They
    0:13:23 have a ton of debt, but it’s that it’s long maturity. It doesn’t come due for a while and it’s an
    0:13:28 exceptionally low interest rate. And I wonder if they spin, if it accelerates, all of the bond
    0:13:33 holders here want out of this debt. They’re making no money. They’re getting two or three or four
    0:13:37 percent. Warner Brothers loves this debt because even though they have a lot, it’s on really friendly
    0:13:43 terms. And I wonder if the thing that gets in the way of the spin is that it might accelerate the
    0:13:48 bond payments or that they might not be able to just transfer debt. I think that’s the key question
    0:13:54 here. But from a shareholder perspective, based on what the market said today, this is Zasloff
    0:14:02 pridding up the company for a spin and saying they will be distinct. It will be easy. The operations
    0:14:09 will break out the revenues and all this. And we’ll have our cool kid, hot girl, growth,
    0:14:16 streaming and Warner Brothers division, and we’ll have the ugly stepchild that still brings home
    0:14:24 money, but is not very popular. That will be these cable assets. This is a good move. Comcast led the
    0:14:30 way. What’ll be interesting is I wonder if he’s sending a signal to Comcast, speak now or forever,
    0:14:35 hold your peace. Because once they spin, it becomes harder for Comcast’s new co, whatever they’re
    0:14:42 calling it, to acquire it. I wouldn’t be surprised if at some point, Brian Roberts calls David Zasloff
    0:14:51 and says, “We should talk. Should our cable assets join together into one?” Because MSNBC
    0:14:57 and CNN having the same backend, same newsroom or similar newsroom, that just makes all sorts of
    0:15:03 sense to me. And I’ll also just point out the fact that this happened now, as you mentioned, one of
    0:15:10 your stock picks was Warner Brothers Discovery. You were saved by the bell because WBD was in the
    0:15:14 red throughout most of the year. And I know people were saying that, oh, Scott, we got it wrong.
    0:15:21 It’s now in the green. It’s up 7% year today. Not huge, but in the green. So I’m going to call it
    0:15:24 away for now. Yeah, but I’m going to perform the market. I’m going to perform the market, though,
    0:15:30 right? We still got two weeks. Where’s those blue chewables? Anyways. And finally, our third
    0:15:39 headline here, Eli Lilly testing GLP-1 drugs for alcohol addiction and drug addiction and tobacco
    0:15:46 addiction. I love this new term here from the CEO, anti-hedonics. This is exactly what you’ve been
    0:15:54 talking about for a long time. I even saw some data saying that people on Osempic reduced their
    0:16:02 drinking by 60%. Diage, the alcohol guys. Oh my God. These stocks, in my opinion, are going to get
    0:16:07 absolutely hammered. We could see alcohol really taken on the chin. Your thoughts on this news.
    0:16:13 These things are scaffolding on our instincts. They just update our instincts to the institutional
    0:16:17 production that our instincts haven’t caught up to. What is an addiction? Addiction is when you
    0:16:21 continue to do something despite it having a negative impact on your life, your health.
    0:16:28 And this basically tells your brain somehow calibrates it to say, no, you can stop eating now
    0:16:34 or no, you don’t need to stay on TikTok for another 11 hours. This is enough. All of a sudden,
    0:16:38 I’m looking at these stocks and going to say, okay, if they’re up 30% or 40%, is it still
    0:16:42 an opportunity to get in? Because if they’re not only treating obesity, but they’re
    0:16:47 treating alcoholism, they’re treating social media addiction, they’re treating porn addictions.
    0:16:54 I mean, I think you’re just going to see gambling addiction. Anyway, I’m very excited about this.
    0:16:58 Yeah. Our thoughts on what this would do to addiction were based mostly on surveys,
    0:17:04 but there is a study out now from Loyola University and it found that people with
    0:17:10 opioid or alcohol use disorder who take GLP-1s have a 40% lower rate of opioid overdose
    0:17:16 and a 50% lower rate of alcohol intoxication. So the peer-reviewed research is now coming.
    0:17:21 What’s happened to the alcohol industry, though, is just fascinating. Here are some stats.
    0:17:27 In the past year, Boston beer has fallen 9%. AB and Bev, which owns Corona and Miklo Baltra,
    0:17:35 it’s fallen 15%. Brown Foreman, which owns Jack Daniel, has fallen 20%. So the entire alcohol
    0:17:41 industry is, I mean, I’m not going to say it’s in free fall, but it feels like it’s approaching
    0:17:46 free fall. I think what we should keep tabs on is what is going to happen to all of these alcohol
    0:17:52 stocks when that anti-hedonic study from Eli Lilly is released. And when we start to see
    0:17:58 just a flood of more peer-reviewed research that says, very conclusively, this is reducing
    0:18:03 people’s use of alcohol. There’s just crazy stats. Something like 1% of alcohol drinkers are
    0:18:09 responsible for 30% or 40% of all alcohol consumption. There’s a decent percentage of,
    0:18:16 I mean, it’s just, it’s staggering. There’s a small number of people that drink like 27 beers a day.
    0:18:23 And the alcohol industry is really kind of driven not by social drinkers, but by alcoholics. And
    0:18:30 that’s not a great stat to talk about. But if you think about who’s going to get GLP1 first,
    0:18:35 it’s the person whose doctor said, if you keep drinking, you’re going to die. And when you take
    0:18:45 out those rabid alcoholics, the drinks industrial complex, if it loses the 1% of the alcoholics,
    0:18:52 its business is going to be off 20 or 30%, which, which spells restructuring, massive layoffs.
    0:18:56 I mean, that’s, that’s going to be a meltdown. And I don’t think that’s happened yet because my
    0:19:04 sense of GLP1 drugs is that right now GLP1 is for ladies of lunch and wealthy people who want to
    0:19:09 lose that last 10 or 15 pounds. Over time you’d like to think, and I think this will happen, it’ll,
    0:19:14 it’ll absorb into the communities that really need it. Some of the lower income communities that
    0:19:22 suffer from really damaging obesity. And that’s when the food industrial complex and the drinks
    0:19:28 market really start to feel, you know, the, the, the boot on their neck. And I think that’s going
    0:19:34 to happen over the next 12 or 24 months. But you could see when you see some stores like a Walmart
    0:19:41 that cater to a middle and lower income consumer report that alcohol sales are off 6%, year on
    0:19:47 year or 8% or 11%, you’re going to see those companies decline. Those companies are about to
    0:19:53 become the next cable assets. And that is they’re still going to be great businesses. They’re high
    0:19:59 margin. They’ll cut costs, but you’re going to see consolidation. This is the new cable.
    0:20:04 Yeah. What you say about alcoholics there, I think is so true of food too. Like the food,
    0:20:09 the food industry relies on foodaholics. And there was this earnings call last week
    0:20:16 that I found pretty amazing from the JM Smucker company. And this is the company that makes
    0:20:22 Twinkies and Ding Dongs and Uncrustables. It makes like all of the most heinous snacks in America.
    0:20:28 And the analysts were asking the CEO, this guy, Mark Smucker, about this stuff. They were asking
    0:20:33 him about the threat of GLP One drugs. They were also asking about the political threat of RFK
    0:20:38 Jr. and his crusade on processed foods. And the response from the CEO was just amazing. He said,
    0:20:45 quote, “As it relates to anything in the political domain, we believe very strongly that snacking
    0:20:52 continues. Consumers are going to continue to look for a way to reward themselves at different times
    0:20:58 throughout the day.” So he’s just like, do whatever you want. Come up with whatever drugs
    0:21:05 you want. You can talk shit about Twinkies and Ding Dongs all day, but we are a country of fat
    0:21:11 people and we are going to continue to capitalize on that, which I just thought was kind of incredibly
    0:21:17 honest from him. Each year, maybe it’s every other year, I speak to the folks at ABMBEP.
    0:21:21 They’re super smart. It’s a great company. They do a great job. They’ve made good acquisitions.
    0:21:26 They have a portfolio of amazing brands. And my message this year is kind of be like,
    0:21:30 you’re fucked and then you’re fucked even worse because not only do you have GLP One,
    0:21:34 but I can’t believe these companies keep paying you to just walk into that boardrooms and tell
    0:21:39 them they’re fucked. Oh, dude, they love it. They’re like S&M fetish. They have an S&M fetish.
    0:21:44 I show up and go, you’re fucked. And they’re like, hit me again. That guy really does it.
    0:21:50 You kidding? Well, but think about it. They’re surrounded by sycophants. It’s like, oh,
    0:21:54 you’re a genius. This is amazing. And then someone comes in and goes, I think you’re fucked. And
    0:21:58 this is why. And they’re like, they’re shocked. And they think, okay, maybe we should have that guy
    0:22:07 back because none of these ass kisses are keeping it real. But the reason they’re doubly fucked is
    0:22:13 one of my big consumer observations hanging out with the young people, the young ins, is whenever
    0:22:19 I go to these summits or these conferences or Coachella or everywhere, I’m like, no one’s drinking.
    0:22:27 What’s going on here? They’re all high, but they’re not drinking. And I even look at my alcohol
    0:22:33 consumption. I love alcohol. I’m a better version of me, a little bit fucked up. One of the reasons
    0:22:39 I work out is so I can drink. But as I’ve gotten older, I realize, okay, I need to reduce my alcohol
    0:22:43 content. So I do this thing where I take five milligrams. If I’m going out for a big night,
    0:22:46 I’m only just started doing this. Daddy’s going to want to have a little rhythm,
    0:22:51 be charming, be the charming Scott, not like get angry and upset and go home early.
    0:22:58 I take a five milligram edible and I’ll have one or two drinks as opposed to six to eight drinks.
    0:23:02 And I got to think there’s a lot of people thinking the same way. And then I go to these
    0:23:08 conferences with young people and they got their mix of MDMA and 2C and they’ve got eyedroppers and
    0:23:14 they’re doing all this weird shit and drinking, you know, mushroom and fuse muffins and shit. And
    0:23:18 I just couldn’t get over it. And I think I told you the story when I went on summit at sea and
    0:23:22 they take over an entire Virgin cruise ship. I went up to the barn and I said, can I have
    0:23:28 a makers and ginger? And he said, finally, someone drinking and young people, I mean,
    0:23:32 not only the future, but they’re kind of the aspirational target. Other people look to
    0:23:39 young people for cues. So I think the drinks industry is the next cable network meltdown.
    0:23:44 We’ll be right back after the break with a look at Google’s breakthrough in quantum.
    0:23:49 If you’re enjoying the show so far, be sure to give Prof. G Market to follow
    0:23:50 wherever you get your podcasts.
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    0:26:16 We’re back with Prof2Markets. Google has unveiled a new quantum chip called Willow,
    0:26:22 which outperforms the world’s most advanced supercomputers. In just five minutes, Willow
    0:26:27 can solve a problem that would take a supercomputer 10 septillion years to solve.
    0:26:30 That’s longer than the estimated age of the universe.
    0:26:35 While some scientists have hailed this as one of the decade’s biggest breakthroughs,
    0:26:41 the chip currently has no practical applications. Scott, we’re going to get your thoughts, but I
    0:26:48 kind of just want to start here with a breakdown on what is quantum computing. It’s a little confusing,
    0:26:56 but just bear with me. The key difference between quantum computing and regular computing is in how
    0:27:02 they process information. A regular computer processes information using binary code,
    0:27:07 so it’s a zero or a one, and these ones and zeros are known as bits. I think people know that.
    0:27:14 A quantum computer, on the other hand, processes information not with bits, but with qubits.
    0:27:20 The funny thing about qubits is that they can be a zero and a one at the same time.
    0:27:25 This is obviously very confusing and strange, but I think the best analogy to think of this
    0:27:29 is to think of it like a coin flip. Imagine you flip a coin.
    0:27:36 A classical computer can only tell you whether it’s heads or tails once the coin has landed,
    0:27:41 but with a quantum computer, it will analyze the coin as it’s being flipped,
    0:27:47 and while it’s flipping, it will calculate the probability of it being heads or tails,
    0:27:52 or in the case of computing, a one or a zero. It’s fundamentally a different way of analyzing
    0:27:57 information, and that’s the key technical difference you need to know about what quantum computing
    0:28:03 actually is. Okay, enough with the nerd talk. Let’s just talk about the practical implications
    0:28:11 of quantum computing. There are three important traits in my view. The first is that these
    0:28:16 quantum computers are exponentially more powerful than classical computers, and that is
    0:28:23 not hyperbole. As you increase the number of qubits, the compute power of a quantum computer
    0:28:27 increases at an exponential rate. That is not true of classical computers,
    0:28:33 so they’re extremely powerful. Two, and this is really important, is that they make a ton of errors,
    0:28:39 and this has been the biggest problem in the field, because it turns out that as that quantum
    0:28:45 computer tries to figure out if the coin’s going to land heads or tails, it very often gets it wrong,
    0:28:49 which screws up the entire computation, and that’s a huge problem which leads me to the
    0:28:55 third important trait, which is it’s highly impractical. Not only in the sense that it gets
    0:29:00 things wrong, but it’s also just designed for these drastically complex questions,
    0:29:04 as you could probably tell at this point, that just don’t really have a place in our world right now.
    0:29:11 Now, the reason this Google announcement is a big deal is because they’ve supposedly solved
    0:29:17 for the second trait that I mentioned, which is it makes a lot of errors. With the Willow chip,
    0:29:22 this new chip they’ve come out with, the more qubits you add to the computation,
    0:29:26 the more accurate the computation gets. In other words, in addition to being crazy,
    0:29:33 crazy powerful, this computer, unlike other quantum computers, also gets things right,
    0:29:38 and that’s the most important difference. That’s why this is actually a really big deal,
    0:29:43 the fact that they have come out with this. We will get to what this might mean for Google’s
    0:29:49 business, but I’ll just stop there in my review of what is quantum computing. Maybe you have
    0:29:54 some reactions. What’s interesting is the market seems to love it. I think because they thought
    0:30:01 this would help supercharge their internal efforts and also that it sort of signals that
    0:30:07 alphabets still has … I’ve always said alphabets, the greatest concentration of IQ in history,
    0:30:15 since maybe NASA in the ’60s or ’70s. This is sort of them saying, “We still got it,” and the market
    0:30:21 seems to like it even though they’re not entirely sure what the applications are. One of the interesting
    0:30:27 notes here is someone says, “This is more shot across IBM’s bow than it is across Nvidia’s bow,
    0:30:34 but this seems to be a signal.” I would argue this is more of a branding event for Alphabet.
    0:30:40 No one’s been able to say which business will this impact. Alphabet has amazing IP and this
    0:30:46 should help across their entire ecosystem, but I still don’t understand what are the consumer
    0:30:52 applications that launch with this, and how is that going to result in additional earnings?
    0:30:57 There are some business use cases that Google hasn’t really talked about,
    0:31:01 but the analysts and the people who are interested in this stuff are talking about,
    0:31:05 and I can just go through a few of them that I think could be really important.
    0:31:14 One is healthcare. Unlike a classical computer, these quantum computers can simulate
    0:31:22 molecular development at mass scale. In theory, they could revolutionize the pharmaceutical
    0:31:27 industry. At least that is what is being said about quantum computers. It’s something that
    0:31:31 classical computers are not good at. The second one, this is the one I find most interesting,
    0:31:41 is encryption. This could massively affect Bitcoin, because cryptography is predicated
    0:31:47 on binary code. That’s how the Bitcoin mining system works, and that’s what makes it so impenetrable.
    0:31:55 With a quantum computer, you could essentially break any encryption system in the world,
    0:32:03 including Bitcoin. Now, to be fair, to mine all the Bitcoin in the world today, you’d need a
    0:32:10 quantum computer with a capacity of 13 million qubits. The Willow chip has a qubit capacity of
    0:32:17 only 105, so we’re not there yet, but theoretically, we could get there. That is also why we saw a dip
    0:32:22 in the price of Bitcoin the day this was announced. I think a lot of people in the Bitcoin world
    0:32:28 went, “Holy shit, what if this thing could crack into the Bitcoin network in a day?”
    0:32:35 It can’t yet, but at some point, it could. I hate to say it. I would enjoy that. I know
    0:32:39 that’s an awful thing to say. I would enjoy it, too. If all Bitcoin became hackable,
    0:32:45 why does that make me happy? Why does that make me happy? Oh, gosh. I think those are my two
    0:32:53 most interesting use cases. My takeaway here, this could be a really big deal,
    0:32:59 but major emphasis on could, because it’s not totally clear to anyone what the timeline on this
    0:33:04 is. We hear about a lot of powerful technologies out there that could revolutionize industries.
    0:33:10 We don’t know when it’ll happen or what it’ll look like. My prediction downstream of that is that I
    0:33:15 think quantum is going to become the new corporate buzzword. I think it’s going to become the new
    0:33:21 vehicle to make these very, very big promises that could pan out, but similar to crypto and
    0:33:27 similar to AI, you’re not accountable to delivering actual results, because it’s so far off in the
    0:33:33 future. This, to me, is like a CFO’s dream. If you can just build a little quantum research
    0:33:38 lab in your company, you don’t even need to generate revenue from it, you will likely
    0:33:42 drastically increase your multiple overnight, and it does not need to be reflected in your
    0:33:47 financial results. My takeaway from this, I think this is real. I think this is cool,
    0:33:53 but I predict a huge hurricane of corporate bullshit that is going to come rolling in hard,
    0:33:56 and I think the name of that hurricane will be quantum.
    0:33:59 I don’t know if you knew this, but here at PropG, we raised $7 billion two years ago,
    0:34:03 and we’ve been experimenting with quantum computing, and it’s really starting to pay off.
    0:34:08 Actually, you’re not a real person. Actually, it’ll be AI. Look, I did what I always do. I turned
    0:34:12 to AI, and I said, “Give me the difference between AI and quantum computing,” and they said, “Okay,
    0:34:18 AI is the simulation of human intelligence and machines that can learn, reason, and make decisions.”
    0:34:23 Example applications, image recognition, natural language processing, autonomous vehicles,
    0:34:30 and recommendation systems. Quantum computing leverages the principles of quantum mechanics,
    0:34:37 including superposition and entanglement to perform calculations much faster than classical
    0:34:42 computers for certain problems. Example applications, cryptography, optimization problems,
    0:34:50 material science simulations, and drug discovery. So, yeah, there you go, and they use this word,
    0:34:59 cubits all over again. More importantly, how do people invest around this? I heard,
    0:35:04 we saw we had in the notes, Rosetti computing. They make chips for quantum computing, much like
    0:35:11 NVIDIA builds chips for AI, started by an IBM quantum scientist. That stock is up sevenfold this
    0:35:16 year. Another quantum computing bet is INQ is pursuing a different type of quantum computing
    0:35:20 than Google, one that could potentially be better for precise measurements in fields,
    0:35:26 including aerospace and defense. INQ is already monetizing quantum, secured a $55 million dollar
    0:35:30 contract with the United States Air Force Research Lab this year, and offers quantum computing through
    0:35:36 Google Cloud, AWS, and Azure. Revenues have increased 90% this year. The stock is up 150%
    0:35:46 year to date. So, this feels pretty cutting edge, but I love what you’ve said, that there’s going
    0:35:55 to be now quantum washing. But also, I wonder if these guys, as much as their stock has been up,
    0:36:00 I wonder if these quantum computing sectors are going to register anything resembling
    0:36:07 the kind of AI, Lollapalooza, in terms of value here. We’ll be right back with a look at the
    0:36:12 World Cup in Saudi Arabia. If you’re enjoying the show so far, hit follow and leave us a review on
    0:36:28 Prof2Mockets. In 100 meters turn right. Actually no, turn left. There’s some awesome new breakfast
    0:36:34 wraps at McDonald’s. Really? Yeah. There’s a sausage bacon and egg, a crispy seasoned chicken one,
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    0:36:45 Wish I had a mouth. Take your morning into a delicious new direction with McDonald’s new
    0:36:51 breakfast wraps. Add a small premium roast coffee for a dollar plus tax at participating McDonald’s
    0:37:02 restaurants. Ba-da-ba-ba-ba. Wolves and dogs are pretty closely related. They actually share 99.9%
    0:37:10 of their genetics. But even when they’re just a few months old, even when they’re raised by
    0:37:15 human scientists, wolves are pretty different from dogs. They start biting you in the ears when
    0:37:20 you’re lying down. If you don’t sit up fast enough and you hear this wonderful noises with little
    0:37:27 and then they chomp you in the ear and you’re like, oh. And when they grow up, these differences get
    0:37:36 even bigger. Dogs are our friends. Wolves are hunters. If I had a sore shoulder, I wouldn’t go
    0:37:41 in with the adult wolves, even if I’d raised them because it could trigger their hunting behavior.
    0:37:47 This week on Unexplainable, how did we get the nice, friendly dogs we know and love today
    0:37:52 from wolves? Follow Unexplainable wherever you listen for new episodes every Wednesday.
    0:38:00 On Wednesday of last week, a man was shot in the United States, but this was not your average
    0:38:06 shooting. Almost immediately, people were celebrating his death and not just the people you’d expect,
    0:38:13 there were moms on Facebook making jokes about it. There were several of those horny copypasta text
    0:38:19 messages circulating around. There was a United Healthcare Shooter Lookalike contest over the
    0:38:27 weekend in Manhattan. At least one person got a tattoo of the suspect. On Monday, Luigi Mangione
    0:38:34 got arrested and then things really got nuts. He went from a few dozen Twitter followers to 300,000
    0:38:41 overnight. People were thirsting for his six-pack. Luigi Mangione is brat. The McDonald’s, where he
    0:38:46 was arrested, has been review-bombed. People are saying there are rats behind the counter. People
    0:38:51 are saying Popeye’s employees would have helped him get rid of the gun. Someone’s got some explaining
    0:38:56 to do, and it’s us. It’s Today Explained. Every weekday, never on the weekends.
    0:39:09 We’re back with Prof. G. Markets. Saudi Arabia will host the 2034 World Cup, marking a key step
    0:39:14 in the country’s plan to establish itself as a global leader in sports. Through its sovereign
    0:39:18 wealth fund, the country has invested billions in a range of sports, including golf, boxing,
    0:39:24 e-sports, and Formula One. The fund is also close to finalizing a $1.5 billion deal
    0:39:31 for a 6% stake in the PGA Tour. Finally, we can stop talking about quantum computing,
    0:39:37 Scott, and get back to what we’re really good at, which is football. We’ve talked a lot about
    0:39:42 Saudi Arabia on this podcast. It’s expanding influence in the sports world. Your reactions to
    0:39:48 Saudi Arabia, I’m not sure anyone thought this wouldn’t happen, but Saudi Arabia is officially
    0:39:53 the host of the 2034 World Cup. Well, first off, there are a few organizations
    0:40:00 that have this veneer of credibility that are more corrupt than these international sports
    0:40:04 organizations because they operate in this sort of Nether-Netherland, the International Olympic
    0:40:09 Committee, and FIFA really takes the crown. If you were going to have countries bid,
    0:40:17 you would want to avoid some sort of conflict? Well, no. FIFA announced a $400 million sponsorship
    0:40:23 deal with Saudi Aramco, Saudi Arabia’s national oil company, the most profitable firm in the
    0:40:33 world, earlier this year. My guess is that was kind of a down payment. The rest of the world
    0:40:40 said, okay, when you show up and you’re bidding on a piece of art and Bill Gates shows up and says,
    0:40:43 “Oh, it’s my dream to own this piece of art.” You might as well go home.
    0:40:50 This is what’s happened here. I think this may be the first time that there was only one nation
    0:40:57 bidding. I think every other nation that was thinking about bidding thought, we’re not going
    0:41:01 to pull 1,100 people together and former governors and get everyone Jonesed up to put
    0:41:08 together the ultimate bid and then host you first class. The FIFA corrupt committee that comes over
    0:41:12 and they get all these great dinners and they’ve said, “No, we’re just not going to bid.”
    0:41:18 And also, realistically, it’s worth more to the kingdom than any other country in the world,
    0:41:24 because these are coming out events. This is a way of highlighting where for real you should come
    0:41:31 here. I remember the Olympics when it was the opening ceremonies in Barcelona, and I had never
    0:41:36 heard anything about Spain or Barcelona. And then they had this brand new beautiful stadium,
    0:41:40 and they had this runner, the lighting in the Olympic torch, and it was this ridiculously
    0:41:46 hot guy wearing no shirt, and he’s running and he stops outside of the stadium, and you see this
    0:41:54 amazing stadium, and the guy picks up a fucking bow and arrow, and then he pulls it back and you see
    0:42:02 his unbelievably ripped torso, and then he looks at the camera and then he nods and he detenses the
    0:42:07 bow and arrow, and he puts the arrow down, and he inflames it, and then he pulls it back,
    0:42:15 and he pulls the thing back for dramatic effect, like it’s about to snap, and he fires the thing,
    0:42:23 and this fucking flaming arrow flies from outside of the stadium over the top of the stadium
    0:42:32 into like this six foot semi-circle of incendiary, lights it, and then it runs up to the Olympic
    0:42:40 flame, torches it, and I’m like, I’m going to fucking Barcelona. I mean, it was just so amazing,
    0:42:46 and then most recently the Paris Olympics have brought kind of new riz to Paris. I remember
    0:42:50 watching some of the sports and at the Olympics and thinking, it’s time for me to get back to Paris.
    0:42:57 Those people just, they just understand style and grace and romance. These are coming out parties.
    0:43:04 I don’t think, I would bet 97% of the world’s population hadn’t heard of Qatar until the World Cup,
    0:43:10 so Saudi Arabia has all of these immense projects coming online. They want to transition to a
    0:43:17 knowledge-based economy, educational institutions, tourism services, and this will be their way of
    0:43:24 bringing the wealthiest people in the world and the eyeballs of the rest of the world to the
    0:43:30 kingdom, and that’s worth a lot of money to them, and it wasn’t, everybody knows about the United
    0:43:36 States. Most people know about Germany, so while they might be willing to spend 10, 20, 30 billion,
    0:43:40 I mean, I gotta think, if Qatar spent a quarter of a trillion dollars or 250 billion, I wouldn’t
    0:43:44 be surprised that the kingdom spends half a trillion dollars on these games. All I know is
    0:43:51 we are going at, and it’s going to be amazing. It’s going to be amazing, and I’m betting on,
    0:43:54 I think Team England is finally going to have their deal here.
    0:43:56 It’s definitely going to happen. Cole Paul, not at home.
    0:43:57 It’s coming home.
    0:43:58 It’s going to come home.
    0:43:59 It’s coming home.
    0:44:05 What you’re describing there is, I mean, you said being on the world stage like that is worth a lot
    0:44:10 of money to them. I think this is the interesting question here. It’s like, what is this worth?
    0:44:16 Is it worth it to do this? If you look at the actual ROI, the return on investment
    0:44:21 of these global sports tournaments, there’s a study from the University of Lausanne,
    0:44:27 which looked at every Olympic Games and every World Cup between the years 1964 and 2018
    0:44:34 to answer that question. What they found is that 95% of the time, you lose money. The average ROI
    0:44:40 for the Olympics and for the World Cup was negative 38%. There were only three competitions
    0:44:46 in history that turned out to be profitable, and those were the 1984 LA Olympics, the 2010 Vancouver
    0:44:51 Winter Olympics, and the 2018 Russia World Cup, and every other tournament lost money.
    0:44:58 Now, to be fair, this is only focusing on the revenues that can be directly attributed to the
    0:45:02 tournament. It’s the ticket sales and the broadcasting rights and the sponsorships, etc.
    0:45:06 What it doesn’t measure is what you’re talking about, which is the soft power,
    0:45:11 the idea that you’re seeing these countries, and then maybe you want to go there and you want to
    0:45:18 spend some money there. I don’t know what it is. My question to you is on soft power, because
    0:45:26 I’m naturally a little skeptical of soft power because of the fact that it is so hard to measure,
    0:45:33 and I get the feeling that we get a little carried away with the glitz and the glamour and the fame of
    0:45:42 it all. My question to you is how does being on the world stage actually translate into legitimate
    0:45:48 economic activity and long-term GDP growth? I get the sense that you believe this is actually a
    0:45:53 very good idea economically for Saudi Arabia. Oh, it’s enormous. The last time I was in Riyadh,
    0:45:58 what I noticed was they put on a lunch and invited me, and they had all these entrepreneurs, and I
    0:46:05 thought I’m going to meet all these Saudis. I did meet some domestic entrepreneurs, a bunch of kids
    0:46:11 who had gone to US schools and then come back to Saudi. What I was shocked by, I met hundreds of
    0:46:17 entrepreneurs who were like, “Yeah, I started a specialized glass company, glass that goes on
    0:46:24 components and iPhones in Seoul, and I moved here,” because I thought the quality of life would be
    0:46:28 better, and basically the kingdom guaranteed me that they would buy everything I could produce.
    0:46:37 I met all these entrepreneurs from Germany. The bottom line is money and growth are a flame,
    0:46:43 and human capital, especially young human capital, is a moth. What you said about soft power is that
    0:46:50 companies that demand specific attribution oftentimes just shouldn’t be in the business
    0:46:55 of brand building, because the thing about brand building is that Philip Morris was never really
    0:47:02 able to directly, they knew that convincing people that if they smoked marble reds, that they could
    0:47:08 relate to and were more like a man with a deeply chiseled jaw, riding an apple loose,
    0:47:17 but they could never reverse engineer a specific billboard to 95 point gross margins on a pack
    0:47:23 of cigarettes that people were paying $4 for that cost $0.20 to produce. Brand building,
    0:47:29 quite frankly, is a little bit about taking a leap of faith, believing that if the intangible
    0:47:35 association surrounding a product, a service, or even a nation will create more awareness,
    0:47:41 more trial, because you can bet MBS looks at Dubai and what they’ve built there and says,
    0:47:46 “Fuck, how did we let that happen? We’re a bigger economy. We have more money.”
    0:47:52 I’m pretty sure that the mandate he’s given to his ministers of infrastructure or development is
    0:47:59 like, “I want Dubai to seem like a fucking cow town after we’re done. I want everyone coming
    0:48:05 here.” The good news about the Kingdom of Saudi Arabia is they have what feels like infinite
    0:48:09 capital right now. The bad news is it’s running out in 30 or 40 or 50 years, and they’re smart,
    0:48:16 they know it. They’re like, “We need to transition from a fossil fuels-based economy
    0:48:21 to a services tourism-based economy.” That’s the bad news. We need to do it. The good news is
    0:48:28 you have a blank check to get it done, but branding is all about taking a leap of faith
    0:48:34 on these intangible emotions. All bet the year after the World Cup, you’re going to see tens of
    0:48:40 thousands of small and big businesses, and the key to all this, the secret sauce, human capital,
    0:48:48 go, “Honey, would you be willing to move to Riyadh?” and people go for the first time,
    0:48:54 “Yeah.” At the bottom, when you’re worth billions of dollars spending money on whatever it is,
    0:48:59 a finely tailored suit, it doesn’t mean anything. Even if that finely tailored suit is 10,000 bucks
    0:49:05 and no one would pay for that, it doesn’t matter. They have the money. What they need is to transition
    0:49:13 their economy. This is probably going to be a good investment, distinct of how much it costs.
    0:49:19 I think the distinction there is I agree with you when you have a lot of money. It’s not a big
    0:49:25 deal to buy a $10,000 suit, but it would be a little crazy to buy a million-dollar suit,
    0:49:28 and we have no idea how much they’re going to spend on this thing.
    0:49:38 If you look at how much Qatar spent, they spent $220 billion. I would bet that Saudi Arabia’s going
    0:49:45 to spend way more than that. I think the way you frame it there is totally accurate. It’s like
    0:49:52 they know that this is immediately going to be in the red from an expenses perspective,
    0:49:58 but they’re looking at the long-term payoff and the long-term benefits. Let’s say they spend
    0:50:02 like a quarter of a trillion dollars on this. I think they’ll spend more, but let’s say they spend
    0:50:09 that much. That is a quarter of a trillion-dollar billboard, essentially. Basically, it’s a giant
    0:50:19 ad. I think the question is, is that ad worth it? I feel pretty somewhat convinced that it might pay
    0:50:23 off, that it might be worth it based on your analysis there, but I think the key takeaway for
    0:50:32 me is this is no more than an ad. No more than an ad? That’s everything. That’s awareness,
    0:50:39 unearned margin. Let me just go back to brand building. I don’t know what Russia spent on the
    0:50:45 World Cup, dramatically less than $220 billion, but I went to games in Moscow and St. Petersburg.
    0:50:49 I remember thinking St. Petersburg was arguably one of the most beautiful cities I’d ever been to,
    0:50:54 walked around, there’d be squares where old people were dancing, and I just had such a positive
    0:51:01 impression of Russia and specifically St. Petersburg. Now, them incarcerating Americans on
    0:51:07 trumped-up charges, that’s sort of like, okay, I’m not going back to Russia for a while.
    0:51:11 That sort of ruins the ad, exactly. These actions on a political stage
    0:51:16 can wipe out a quarter of a trillion dollars in branding.
    0:51:20 Yeah. Well, let’s just take a moment to talk about the controversies around this,
    0:51:24 because that’s important to the brand here, too. I mean, if people think that this was
    0:51:30 rigged, as many people do, or they think that Saudi Arabia is an unethical country,
    0:51:33 that’s important to this conversation, too. But I’m just going to start with this
    0:51:38 bid evaluation report from FIFA that they released, which I just found so funny.
    0:51:45 It’s this report where they assess all of the viability of all the possible host nations.
    0:51:53 So, first off, they gave Saudi Arabia the highest viability score ever, which is hilarious.
    0:52:00 They said that from a commercial standpoint, the bid is, quote, “very good.” But my favorite
    0:52:07 was their evaluation of the human rights risk, which they determined was, quote, “medium,”
    0:52:10 which is also hilarious.
    0:52:14 Human rights risk of the games or human rights risk of KSA?
    0:52:16 Of the World Cup, of them hosting the World Cup.
    0:52:17 The medium?
    0:52:24 Human rights risk, medium. That was their analysis. But they ultimately landed on the greatest score
    0:52:27 ever given in the FIFA bid evaluation report.
    0:52:29 Yeah, it’s called money, the greatest score.
    0:52:30 Exactly.
    0:52:39 I’ll go. 100% I’ll go. I can’t wait. I literally can’t wait. And also, I actually quite like
    0:52:40 the kingdom and think they’re doing good things.
    0:52:48 But people hear your views on Saudi Arabia, and they get upset when you defend them.
    0:52:52 And the reason they, I mean, the things that people focus on, there’s one,
    0:52:57 the killing of Jamal Khashoggi. We’ve talked about that. There’s migrant worker conditions.
    0:53:02 I would argue that that’s in basically any country.
    0:53:04 But you’re leaving out treatment of women.
    0:53:07 Yeah. There’s discrimination of women, which they are improving on.
    0:53:13 But still not great. But then there’s also the discrimination against gays,
    0:53:15 which they are definitely not improving on.
    0:53:21 So the penalty for homosexuality in Saudi Arabia today is still, in some cases, death.
    0:53:29 And in combination with the fact that a lot of people think this voting system was rigged,
    0:53:34 which it probably was, they were the only bidder, I think a lot of people are saying,
    0:53:42 there’s foul play here. What I would say, I think we all agree there is foul play here,
    0:53:49 in some sense. The question is, how bad is it? Like, how bad are the human rights abuses,
    0:53:54 and how bad is the corruption? And is it bad enough that we will start to see
    0:54:00 mass boycotting of this World Cup? Because on this podcast, we’re not going to evaluate
    0:54:03 the ethics of things. We’re going to evaluate the economics of things.
    0:54:07 And so what I’m interested in, and I’d like to get your view, is do you think
    0:54:15 the human rights stuff and the corruption stuff is bad to the point that people are actually
    0:54:19 not going to go to this thing, and they’re not going to watch it? Or is this another one of
    0:54:23 those situations where we talk about it a lot online? Maybe we see some protests,
    0:54:26 but at the end of the day, everyone shows up and everyone makes money.
    0:54:36 Oh, entirely the latter. And also, this stuff’s important, and public pressure and international
    0:54:45 pressure is important. And I worry one of the things I don’t like about the most recent election,
    0:54:50 I have trouble waving my finger in anyone’s face around women’s rights right now.
    0:54:56 We’re the only nation that’s taken away a women’s right. Typically, every other nation in the world
    0:55:02 when they grant women rights, they get to hold on to them. And the kingdom right now, in my opinion,
    0:55:06 is reforming faster than any nation in the world. And every six months,
    0:55:13 MBS rolls out new reforms. Women in the kingdom used to need the permission of their husbands to
    0:55:18 travel. They’ve done away with that. They couldn’t drive. They can now drive. That may not sound
    0:55:22 like a big deal, but I’m looking at the slope of things. In addition, I want to be clear,
    0:55:28 I think they murdered Khashoggi. The question is, all right, they did it. I think they paid a huge
    0:55:34 price for it. Does that mean we’re never going to do business with them again? And let me go even
    0:55:38 further. I think there’s less antisemitism in the kingdom right now than there are pockets in the
    0:55:44 United States. I think the kingdom is probably going to normalize relations with Israel. This
    0:55:49 is a complicated issue. I don’t want to pretend to have moral clarity around this. The question is,
    0:55:54 do I think people are going to go and corporations are going to headquarter there?
    0:56:00 Absolutely. This will be the most successful World Cup in history. Because at the end of the day,
    0:56:04 Ed, and this isn’t the way the world should be, the way the world is, money wins.
    0:56:11 And they’ll put on an amazing show and they will clean up their act or they will try to. And also,
    0:56:15 it begs a bigger point, are human rights going to be better or worse
    0:56:22 if the World Cup is in the kingdom? I would argue they’re going to be better. I would argue when
    0:56:30 they are on a global stage that they have more motivation and incentive to improve, to continue
    0:56:36 to improve and head in the right direction. I’m more around engagement than sitting and waving
    0:56:44 your finger as a 15-year-old in Mississippi who’s raped, doesn’t have access to terminate a pregnancy.
    0:56:48 We have gotten so far afield here, Ed. Let’s go back to talking about quants. Cubits.
    0:56:53 Cubits. Yeah, I think just to summarize what you’re saying there, it’s like
    0:56:59 they are trending in the right direction. You cannot argue that. They definitely are on the
    0:57:05 right trajectory when it comes to human rights. Are they doing that for ethical reasons? Probably
    0:57:10 not. But I think they’ve looked at the rest of the world and they’ve seen that, generally speaking,
    0:57:15 a nation that has strong human rights laws and that treats its people fairly,
    0:57:20 generally speaking, those countries get rich. I think that’s pretty much the play here.
    0:57:27 100%. Okay, we want to participate in this economy. We’re going to go lean into human rights,
    0:57:33 not because we necessarily want to for our people. I genuinely think that. I think we’re
    0:57:38 going to do it because it’s going to make us some good money. That’s worth it. I think that’s what’s
    0:57:43 going to happen here. Let’s take a look at the weekend. We’ll hear the Fed’s interest rate decision
    0:57:48 for December and we’ll also see earnings from Nike and FedEx. Scott, do you have any predictions?
    0:57:52 Well, my prediction is that Metta’s next earnings call, which isn’t until February,
    0:58:01 is going to be just blow away again expectations because that notion that if you put a frog in
    0:58:06 a boiling water, jumps out. If you put a frog in water and then turn the heat up, it doesn’t know
    0:58:13 it’s being boiled to death. I don’t think we realize just how bad the rage has become in the
    0:58:20 United States. As someone, I only spend probably two weeks every two months there. It’s like when
    0:58:25 you come home, Ed, and you haven’t seen your kids for a while, and this was one of the most
    0:58:28 rattling things that happened to me when I used to go on business trips for two or three weeks,
    0:58:33 I could notice, I would always poke my head in and when they’re sleeping and a couple of times,
    0:58:38 I’m like, “Oh my God, he’s grown.” That would rattle me that I was spending too much time on
    0:58:42 the road, whereas when I’m with them every day, I don’t perceive them growing because it’s incremental.
    0:58:47 The interrupted cadence of living in London and only being in the US
    0:58:52 once every couple of months, I have noticed a dramatic increase in what I’ll call
    0:59:00 community rage or public rage. Everyone is pissed off. Everyone is dissatisfied with each other,
    0:59:10 with policies, with government, with the world. I think that is the primary signal for profitability
    0:59:15 at Metta because Metta has figured out that it’s not sex itself in the world of marketing,
    0:59:23 it’s rage. The amount of rage that has been fomented and monetized by Metta has hit a new
    0:59:29 high, I believe, around the election. The proxy or the litmus test or a decent
    0:59:36 blood pressure test for rage in the US is the profitability of Metta and it is fucking off
    0:59:41 the charts right now in their largest market in the US, which I believe means they are going to
    0:59:47 report a just staggering quarter in their next earnings call in February. My prediction,
    0:59:54 another massive beat from Metta based on the fact they have figured out a way to not only
    1:00:01 incent but monetize rage at discord and polarization in the United States, which is at record levels.
    1:00:07 This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate
    1:00:10 producer is Alison Weiss, Mia Silverio is our research lead, Jessica Lange is our research
    1:00:16 associate, Drew Burris is our technical director, and Catherine Dillon is our executive producer.
    1:00:20 Thank you for listening to ProfG Markets from the Vox Media Podcast Network. Join us on Thursday
    1:00:24 for our conversation with Morgan Housel only on ProfG Markets.
    1:00:54 Lifetimes. You help me in kind reunion as the world turns. And the dark flies.
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    0:01:38 Walmart or Shoppers Drug Mart today. Today is number $400 billion. That’s Elon Musk’s record
    0:01:44 high net worth as of last week. Power corrupts and absolute power absolutely corrupts. This is
    0:01:51 terrible for society and will cause real damage to economies, justice, and democracy around the world.
    0:02:07 Welcome to Prop G Markets. Today, we’re discussing Google’s quantum breakthrough
    0:02:11 and Saudi Arabia’s World Cup. But first, here with, oh wait, banter.
    0:02:15 You can introduce me and then we can do banter. You don’t have to.
    0:02:20 Like anyone doesn’t know you? I’m so sick of everyone comes up to me. He’s like, tell Ed,
    0:02:25 we said hello. If it’s anyone young, they’re like, I love that Ed Elson. Yeah, I know. Yeah,
    0:02:29 he’s great. Love to hear that. He’s great. What are you doing, Ed? Where are you? What’s going on?
    0:02:36 I’m in New York and I’m just sort of reeling from that $400 billion net worth start. I don’t know
    0:02:43 if you realize this, but since Trump was elected, since November 5th, Elon’s net worth has increased
    0:02:50 by 66% and he’s added $4 billion to his net worth every day. Yeah, and I was excited about getting
    0:02:58 Zip Recruiter as a sponsor last week. Oh, God. And here I am selling like chewable erectile
    0:03:06 dysfunction drugs. Seriously. Oh, wait, they’re going to spend $1,100 on first-time founders.
    0:03:13 Sure, I’ll meet with them. Oh, God. It’s a good life. Oh, wait, I’m headed to Riyadh. Let’s talk
    0:03:18 about that. Let’s bring this back to me. I’m headed to Riyadh on one on Tuesday. Have you ever
    0:03:22 been to Riyadh? You haven’t been to Riyadh, right? No, no. You’re welcome to take me with you.
    0:03:28 Yeah, if you were much more interesting and I liked you more, we’d absolutely be rolling together.
    0:03:34 That’s not fair. I think you’re both interesting and likeable, but I’ve been to Dubai a bunch of
    0:03:38 times. Only been to Riyadh once and I was only there for a conference. I’m curious. I’m taking
    0:03:43 a little bit extra time and I’m going to check it out. I’m fascinated by the kingdom right now.
    0:03:47 Well, we’ll be discussing that more because we’ve got Saudi Arabia on our docket here.
    0:03:50 But let’s start off with our weekly review of market vitals.
    0:04:02 The S&P 500 declined. The dollar gained. Bitcoin hit another record
    0:04:05 and the yield on 10-year treasuries increased, shifting to the headlines.
    0:04:10 A federal judge has blocked grocery store Kroger’s acquisition of Albertson’s.
    0:04:15 The judge sided with the FTC, agreeing that the $25 billion deal would hurt consumers
    0:04:20 and limit competition. Following the judge’s ruling, Albertson’s terminated the deal
    0:04:25 and filed a lawsuit against Kroger, alleging the company didn’t do enough to secure regulatory
    0:04:31 approval. Warner Brothers’ discovery is splitting into two units, one for its streaming and studio
    0:04:37 business and another for its linear TV networks. The move paves the way for a potential spin-off
    0:04:42 or sale of its TV business and the stock popped more than 14% on the news.
    0:04:48 And finally, Eli Lilly will begin testing its GLP1 drug Zep bound next year as a treatment
    0:04:56 for drug and alcohol addiction. Eli Lilly CEO Dave Ricks described GLP1 drugs as anti-hedonics,
    0:05:03 saying they can help reduce the desire cycle. Scott, your thoughts starting with Kroger’s
    0:05:10 acquisition of Albertson’s, which was set to be one of the biggest M&A deals in history, called off.
    0:05:16 So my gut was that this was populist bullshit and I love antitrust. I love black and mergers.
    0:05:21 I’m an even bigger fan of breakups. But my fear was when you look at Albertson’s or Kroger,
    0:05:27 it’s not like these guys are lighting up the business world. This is specifically their
    0:05:32 existential threat is Amazon. I feel like this is not a great business. It’s low margin. It’s
    0:05:37 difficult. I think there’s still quite a bit of competition here. This is populist bullshit
    0:05:45 because just as diapers and gas prices kind of weigh on people’s sort of view of the world,
    0:05:48 like if gas prices go up, they get angry at the administration and if diapers are more expensive,
    0:05:56 they think, oh, this store is a ripoff. Grocery prices have become a very strong indicator for
    0:06:01 how the majority of the public feels about inflation and the administration. And so I
    0:06:08 thought it was sort of an easy target to say, no, grocery prices need to stay low. But South Dakota
    0:06:14 State University found that supermarket mergers can actually decrease prices for customers due
    0:06:19 to economies of scale. Albertson’s decreased 4% on the news, Kroger increased 5% after announcing
    0:06:24 would abandon the merger and restart stock buybacks. That’s because typically the person on top who
    0:06:29 makes the acquisition overpays only one in three acquisitions work. But I think, I don’t know,
    0:06:36 I think that the real threat is Amazon and having more formidable competitors to Amazon
    0:06:43 would create a healthier ecosystem. Yeah, I’m a little torn on this. I think the really interesting
    0:06:51 thing here is you mentioned that they’re kind of the smaller players in the market. And you’ve got
    0:06:57 Amazon and you’ve got Walmart who are crushing them. And this was Kroger and Albertson’s argument.
    0:07:02 Their argument was that this was basically the only way to compete with all the online retailers,
    0:07:06 especially Amazon. And I think they probably thought that that would work with the FTC because
    0:07:13 they know that the FTC has been going after Amazon anyway. But the FTC’s response was,
    0:07:18 okay, well, you say you want to compete with the online retailers, but you’re actually not
    0:07:23 an online retailer. You are a supermarket. And those are two very different things.
    0:07:29 And what’s interesting is that this is ultimately what the decision came down to. It was an argument
    0:07:36 over what the definition of a supermarket actually is. And the judge made her opinion very
    0:07:42 clear. And the first line of the conclusion was, quote, supermarkets are distinct from other grocery
    0:07:48 retailers. So in other words, she’s saying, you know, unlike your framing, where you guys are
    0:07:53 these little fish in this big, big pond of retail, we believe that you are in fact the
    0:08:00 big fish in the little pond of supermarkets and supermarkets and big retail are two different
    0:08:07 things. And therefore, to team up like this would be unfair. And I’ve been kind of back and
    0:08:14 forth on this because it’s really about framing. It’s like, are they dominating the supermarket
    0:08:20 business? Or are they struggling in the retail business? And that’s really what this came down
    0:08:26 to. So I’m not sure I have an opinion yet, but I do find it interesting that all of this comes
    0:08:32 down to a dispute over definitions. So I think that that argument holds water if the framing is
    0:08:38 that they’re not really competing against Amazon, they’re competing against other grocery supermarkets.
    0:08:42 But even if you say, okay, take Amazon out of the competitive set,
    0:08:49 the biggest grocery supermarket in my mind is Walmart. Right. And by the way, just the way
    0:08:54 they, their name for Walmart, it’s very interesting, they called Walmart a large format store.
    0:08:59 Whatever we call it, Walmart’s biggest category is groceries. There are still a large number of
    0:09:04 Walmart customers that primarily go there just for groceries. So call it what you want. It’s the
    0:09:11 largest grocery provider or retailer in the nation. They have a 25% share of the grocery market and
    0:09:17 combined, this company had the merger gone through or been approved would have had 11%. So okay, fine,
    0:09:20 we’re not competing against Amazon, but you’re going to tell us we’re not competing against
    0:09:27 Walmart. And Walmart with that scale, based on the most recent earnings call, is kicking the
    0:09:34 shit out of Target, much less Kroger’s and Albertson’s. And so their case is that Kroger, people,
    0:09:37 people don’t think of Walmart for groceries. They only go to this separate,
    0:09:42 this separate category of which you’re dominant players. I just don’t buy that. I think a lot
    0:09:47 of people, if Kroger’s- Plus Amazon owns Whole Foods. There you go. It’s the other side of this,
    0:09:52 too. I think if people think, oh, Walmart has the lowest prices because of their scale and
    0:09:58 their technology, I’m going to buy my groceries from Walmart and not from Kroger’s or Albertson.
    0:10:04 So based on the fact, I think they had eight and 3% market share and Walmart,
    0:10:12 distinctive Amazon has 25%. And it feels like a pretty robust sector. Let me put it this way.
    0:10:17 I think Doug McMillan is really happy to see a Walmart. He’s like, oh, God, we’re going to
    0:10:21 roll over these guys. They don’t have the capital to make the types of investments we can in
    0:10:28 technology. They don’t have the scale to turn the screws on all of our suppliers like we do.
    0:10:32 So I think they got it wrong here. I wonder if actually this one should have gone through.
    0:10:37 Yeah. I could imagine a world like 10 years from now where Walmart and Amazon absolutely
    0:10:43 dominate the supermarket and grocery business. Prices are high and we’ll look back at this
    0:10:47 moment and be like, damn, we really fucked up there. We could have prevented this. I think
    0:10:52 that’s very possible. One final note though, Wall Street never thought this was going to
    0:10:59 go through from the very beginning. So this deal was pricing Albertson’s at $34 a share.
    0:11:03 The stock’s been hovering at around $18 a share basically throughout the,
    0:11:09 from when they announced the deal to today, it’s been trading at a discount. So it is
    0:11:13 interesting that Wall Street from the get go was like, this is not going to go through.
    0:11:22 Let’s move on to Warner Brothers Discovery. This is sort of downstream of your prediction about
    0:11:28 how we’re going to see a lot of spins in the media business, specifically cable assets will be spun
    0:11:37 off to capture more value. This is a little different though, because unlike Comcast who
    0:11:40 did exactly what you said in your prediction last month, where they spun out their cable
    0:11:46 assets and do a new company, this is just a restructuring. So the cable assets are going
    0:11:50 to have their own operating division. The streaming assets are going to have their own
    0:11:55 operating division, but there’s no spin here. At least there’s no spin yet. It’s still one company.
    0:12:01 So my question for you is, what does this actually mean for shareholders? Should we be
    0:12:08 expecting a spin? And if not, does this sort of relabeling into different categories actually do
    0:12:14 much to the company? This is a preview. This is making it, he’s setting the table for a spin.
    0:12:20 And that is he’s creating distinct operating units such that the spin will be more elegant and easy.
    0:12:24 And the fact that the stock is up 15% now today is basically the market saying,
    0:12:31 oh, you’re flirting with a spin will come on over here. This means the spin, in my opinion,
    0:12:37 is going to happen. I don’t know if the spin will take some most or all the debt, but they will
    0:12:41 probably, I mean, what you have with the cable business is highly profitable businesses that
    0:12:47 can probably support a lot of debt because they’re cashflow generative. And this will free up a pure
    0:12:53 play around Warner and HBO, which will trade at a much higher stock price. And my two stock picks
    0:12:59 or my three stock picks for 2024 were Alphabet because I thought they had more IP and that it
    0:13:06 would be Revenge or the Empire Strikes Back around AI. And then Warner Brothers Discovery and Disney
    0:13:12 had been oversold. Part of the thing getting in the way of the spin, I believe, was their capital
    0:13:17 structure is a bit of a straight jacket. What do I mean by that? They have really good debt. They
    0:13:23 have a ton of debt, but it’s that it’s long maturity. It doesn’t come due for a while and it’s an
    0:13:28 exceptionally low interest rate. And I wonder if they spin, if it accelerates, all of the bond
    0:13:33 holders here want out of this debt. They’re making no money. They’re getting two or three or four
    0:13:37 percent. Warner Brothers loves this debt because even though they have a lot, it’s on really friendly
    0:13:43 terms. And I wonder if the thing that gets in the way of the spin is that it might accelerate the
    0:13:48 bond payments or that they might not be able to just transfer debt. I think that’s the key question
    0:13:54 here. But from a shareholder perspective, based on what the market said today, this is Zasloff
    0:14:02 pridding up the company for a spin and saying they will be distinct. It will be easy. The operations
    0:14:09 will break out the revenues and all this. And we’ll have our cool kid, hot girl, growth,
    0:14:16 streaming and Warner Brothers division, and we’ll have the ugly stepchild that still brings home
    0:14:24 money, but is not very popular. That will be these cable assets. This is a good move. Comcast led the
    0:14:30 way. What’ll be interesting is I wonder if he’s sending a signal to Comcast, speak now or forever,
    0:14:35 hold your peace. Because once they spin, it becomes harder for Comcast’s new co, whatever they’re
    0:14:42 calling it, to acquire it. I wouldn’t be surprised if at some point, Brian Roberts calls David Zasloff
    0:14:51 and says, “We should talk. Should our cable assets join together into one?” Because MSNBC
    0:14:57 and CNN having the same backend, same newsroom or similar newsroom, that just makes all sorts of
    0:15:03 sense to me. And I’ll also just point out the fact that this happened now, as you mentioned, one of
    0:15:10 your stock picks was Warner Brothers Discovery. You were saved by the bell because WBD was in the
    0:15:14 red throughout most of the year. And I know people were saying that, oh, Scott, we got it wrong.
    0:15:21 It’s now in the green. It’s up 7% year today. Not huge, but in the green. So I’m going to call it
    0:15:24 away for now. Yeah, but I’m going to perform the market. I’m going to perform the market, though,
    0:15:30 right? We still got two weeks. Where’s those blue chewables? Anyways. And finally, our third
    0:15:39 headline here, Eli Lilly testing GLP-1 drugs for alcohol addiction and drug addiction and tobacco
    0:15:46 addiction. I love this new term here from the CEO, anti-hedonics. This is exactly what you’ve been
    0:15:54 talking about for a long time. I even saw some data saying that people on Osempic reduced their
    0:16:02 drinking by 60%. Diage, the alcohol guys. Oh my God. These stocks, in my opinion, are going to get
    0:16:07 absolutely hammered. We could see alcohol really taken on the chin. Your thoughts on this news.
    0:16:13 These things are scaffolding on our instincts. They just update our instincts to the institutional
    0:16:17 production that our instincts haven’t caught up to. What is an addiction? Addiction is when you
    0:16:21 continue to do something despite it having a negative impact on your life, your health.
    0:16:28 And this basically tells your brain somehow calibrates it to say, no, you can stop eating now
    0:16:34 or no, you don’t need to stay on TikTok for another 11 hours. This is enough. All of a sudden,
    0:16:38 I’m looking at these stocks and going to say, okay, if they’re up 30% or 40%, is it still
    0:16:42 an opportunity to get in? Because if they’re not only treating obesity, but they’re
    0:16:47 treating alcoholism, they’re treating social media addiction, they’re treating porn addictions.
    0:16:54 I mean, I think you’re just going to see gambling addiction. Anyway, I’m very excited about this.
    0:16:58 Yeah. Our thoughts on what this would do to addiction were based mostly on surveys,
    0:17:04 but there is a study out now from Loyola University and it found that people with
    0:17:10 opioid or alcohol use disorder who take GLP-1s have a 40% lower rate of opioid overdose
    0:17:16 and a 50% lower rate of alcohol intoxication. So the peer-reviewed research is now coming.
    0:17:21 What’s happened to the alcohol industry, though, is just fascinating. Here are some stats.
    0:17:27 In the past year, Boston beer has fallen 9%. AB and Bev, which owns Corona and Miklo Baltra,
    0:17:35 it’s fallen 15%. Brown Foreman, which owns Jack Daniel, has fallen 20%. So the entire alcohol
    0:17:41 industry is, I mean, I’m not going to say it’s in free fall, but it feels like it’s approaching
    0:17:46 free fall. I think what we should keep tabs on is what is going to happen to all of these alcohol
    0:17:52 stocks when that anti-hedonic study from Eli Lilly is released. And when we start to see
    0:17:58 just a flood of more peer-reviewed research that says, very conclusively, this is reducing
    0:18:03 people’s use of alcohol. There’s just crazy stats. Something like 1% of alcohol drinkers are
    0:18:09 responsible for 30% or 40% of all alcohol consumption. There’s a decent percentage of,
    0:18:16 I mean, it’s just, it’s staggering. There’s a small number of people that drink like 27 beers a day.
    0:18:23 And the alcohol industry is really kind of driven not by social drinkers, but by alcoholics. And
    0:18:30 that’s not a great stat to talk about. But if you think about who’s going to get GLP1 first,
    0:18:35 it’s the person whose doctor said, if you keep drinking, you’re going to die. And when you take
    0:18:45 out those rabid alcoholics, the drinks industrial complex, if it loses the 1% of the alcoholics,
    0:18:52 its business is going to be off 20 or 30%, which, which spells restructuring, massive layoffs.
    0:18:56 I mean, that’s, that’s going to be a meltdown. And I don’t think that’s happened yet because my
    0:19:04 sense of GLP1 drugs is that right now GLP1 is for ladies of lunch and wealthy people who want to
    0:19:09 lose that last 10 or 15 pounds. Over time you’d like to think, and I think this will happen, it’ll,
    0:19:14 it’ll absorb into the communities that really need it. Some of the lower income communities that
    0:19:22 suffer from really damaging obesity. And that’s when the food industrial complex and the drinks
    0:19:28 market really start to feel, you know, the, the, the boot on their neck. And I think that’s going
    0:19:34 to happen over the next 12 or 24 months. But you could see when you see some stores like a Walmart
    0:19:41 that cater to a middle and lower income consumer report that alcohol sales are off 6%, year on
    0:19:47 year or 8% or 11%, you’re going to see those companies decline. Those companies are about to
    0:19:53 become the next cable assets. And that is they’re still going to be great businesses. They’re high
    0:19:59 margin. They’ll cut costs, but you’re going to see consolidation. This is the new cable.
    0:20:04 Yeah. What you say about alcoholics there, I think is so true of food too. Like the food,
    0:20:09 the food industry relies on foodaholics. And there was this earnings call last week
    0:20:16 that I found pretty amazing from the JM Smucker company. And this is the company that makes
    0:20:22 Twinkies and Ding Dongs and Uncrustables. It makes like all of the most heinous snacks in America.
    0:20:28 And the analysts were asking the CEO, this guy, Mark Smucker, about this stuff. They were asking
    0:20:33 him about the threat of GLP One drugs. They were also asking about the political threat of RFK
    0:20:38 Jr. and his crusade on processed foods. And the response from the CEO was just amazing. He said,
    0:20:45 quote, “As it relates to anything in the political domain, we believe very strongly that snacking
    0:20:52 continues. Consumers are going to continue to look for a way to reward themselves at different times
    0:20:58 throughout the day.” So he’s just like, do whatever you want. Come up with whatever drugs
    0:21:05 you want. You can talk shit about Twinkies and Ding Dongs all day, but we are a country of fat
    0:21:11 people and we are going to continue to capitalize on that, which I just thought was kind of incredibly
    0:21:17 honest from him. Each year, maybe it’s every other year, I speak to the folks at ABMBEP.
    0:21:21 They’re super smart. It’s a great company. They do a great job. They’ve made good acquisitions.
    0:21:26 They have a portfolio of amazing brands. And my message this year is kind of be like,
    0:21:30 you’re fucked and then you’re fucked even worse because not only do you have GLP One,
    0:21:34 but I can’t believe these companies keep paying you to just walk into that boardrooms and tell
    0:21:39 them they’re fucked. Oh, dude, they love it. They’re like S&M fetish. They have an S&M fetish.
    0:21:44 I show up and go, you’re fucked. And they’re like, hit me again. That guy really does it.
    0:21:50 You kidding? Well, but think about it. They’re surrounded by sycophants. It’s like, oh,
    0:21:54 you’re a genius. This is amazing. And then someone comes in and goes, I think you’re fucked. And
    0:21:58 this is why. And they’re like, they’re shocked. And they think, okay, maybe we should have that guy
    0:22:07 back because none of these ass kisses are keeping it real. But the reason they’re doubly fucked is
    0:22:13 one of my big consumer observations hanging out with the young people, the young ins, is whenever
    0:22:19 I go to these summits or these conferences or Coachella or everywhere, I’m like, no one’s drinking.
    0:22:27 What’s going on here? They’re all high, but they’re not drinking. And I even look at my alcohol
    0:22:33 consumption. I love alcohol. I’m a better version of me, a little bit fucked up. One of the reasons
    0:22:39 I work out is so I can drink. But as I’ve gotten older, I realize, okay, I need to reduce my alcohol
    0:22:43 content. So I do this thing where I take five milligrams. If I’m going out for a big night,
    0:22:46 I’m only just started doing this. Daddy’s going to want to have a little rhythm,
    0:22:51 be charming, be the charming Scott, not like get angry and upset and go home early.
    0:22:58 I take a five milligram edible and I’ll have one or two drinks as opposed to six to eight drinks.
    0:23:02 And I got to think there’s a lot of people thinking the same way. And then I go to these
    0:23:08 conferences with young people and they got their mix of MDMA and 2C and they’ve got eyedroppers and
    0:23:14 they’re doing all this weird shit and drinking, you know, mushroom and fuse muffins and shit. And
    0:23:18 I just couldn’t get over it. And I think I told you the story when I went on summit at sea and
    0:23:22 they take over an entire Virgin cruise ship. I went up to the barn and I said, can I have
    0:23:28 a makers and ginger? And he said, finally, someone drinking and young people, I mean,
    0:23:32 not only the future, but they’re kind of the aspirational target. Other people look to
    0:23:39 young people for cues. So I think the drinks industry is the next cable network meltdown.
    0:23:44 We’ll be right back after the break with a look at Google’s breakthrough in quantum.
    0:23:49 If you’re enjoying the show so far, be sure to give Prof. G Market to follow
    0:23:50 wherever you get your podcasts.
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    0:26:16 We’re back with Prof2Markets. Google has unveiled a new quantum chip called Willow,
    0:26:22 which outperforms the world’s most advanced supercomputers. In just five minutes, Willow
    0:26:27 can solve a problem that would take a supercomputer 10 septillion years to solve.
    0:26:30 That’s longer than the estimated age of the universe.
    0:26:35 While some scientists have hailed this as one of the decade’s biggest breakthroughs,
    0:26:41 the chip currently has no practical applications. Scott, we’re going to get your thoughts, but I
    0:26:48 kind of just want to start here with a breakdown on what is quantum computing. It’s a little confusing,
    0:26:56 but just bear with me. The key difference between quantum computing and regular computing is in how
    0:27:02 they process information. A regular computer processes information using binary code,
    0:27:07 so it’s a zero or a one, and these ones and zeros are known as bits. I think people know that.
    0:27:14 A quantum computer, on the other hand, processes information not with bits, but with qubits.
    0:27:20 The funny thing about qubits is that they can be a zero and a one at the same time.
    0:27:25 This is obviously very confusing and strange, but I think the best analogy to think of this
    0:27:29 is to think of it like a coin flip. Imagine you flip a coin.
    0:27:36 A classical computer can only tell you whether it’s heads or tails once the coin has landed,
    0:27:41 but with a quantum computer, it will analyze the coin as it’s being flipped,
    0:27:47 and while it’s flipping, it will calculate the probability of it being heads or tails,
    0:27:52 or in the case of computing, a one or a zero. It’s fundamentally a different way of analyzing
    0:27:57 information, and that’s the key technical difference you need to know about what quantum computing
    0:28:03 actually is. Okay, enough with the nerd talk. Let’s just talk about the practical implications
    0:28:11 of quantum computing. There are three important traits in my view. The first is that these
    0:28:16 quantum computers are exponentially more powerful than classical computers, and that is
    0:28:23 not hyperbole. As you increase the number of qubits, the compute power of a quantum computer
    0:28:27 increases at an exponential rate. That is not true of classical computers,
    0:28:33 so they’re extremely powerful. Two, and this is really important, is that they make a ton of errors,
    0:28:39 and this has been the biggest problem in the field, because it turns out that as that quantum
    0:28:45 computer tries to figure out if the coin’s going to land heads or tails, it very often gets it wrong,
    0:28:49 which screws up the entire computation, and that’s a huge problem which leads me to the
    0:28:55 third important trait, which is it’s highly impractical. Not only in the sense that it gets
    0:29:00 things wrong, but it’s also just designed for these drastically complex questions,
    0:29:04 as you could probably tell at this point, that just don’t really have a place in our world right now.
    0:29:11 Now, the reason this Google announcement is a big deal is because they’ve supposedly solved
    0:29:17 for the second trait that I mentioned, which is it makes a lot of errors. With the Willow chip,
    0:29:22 this new chip they’ve come out with, the more qubits you add to the computation,
    0:29:26 the more accurate the computation gets. In other words, in addition to being crazy,
    0:29:33 crazy powerful, this computer, unlike other quantum computers, also gets things right,
    0:29:38 and that’s the most important difference. That’s why this is actually a really big deal,
    0:29:43 the fact that they have come out with this. We will get to what this might mean for Google’s
    0:29:49 business, but I’ll just stop there in my review of what is quantum computing. Maybe you have
    0:29:54 some reactions. What’s interesting is the market seems to love it. I think because they thought
    0:30:01 this would help supercharge their internal efforts and also that it sort of signals that
    0:30:07 alphabets still has … I’ve always said alphabets, the greatest concentration of IQ in history,
    0:30:15 since maybe NASA in the ’60s or ’70s. This is sort of them saying, “We still got it,” and the market
    0:30:21 seems to like it even though they’re not entirely sure what the applications are. One of the interesting
    0:30:27 notes here is someone says, “This is more shot across IBM’s bow than it is across Nvidia’s bow,
    0:30:34 but this seems to be a signal.” I would argue this is more of a branding event for Alphabet.
    0:30:40 No one’s been able to say which business will this impact. Alphabet has amazing IP and this
    0:30:46 should help across their entire ecosystem, but I still don’t understand what are the consumer
    0:30:52 applications that launch with this, and how is that going to result in additional earnings?
    0:30:57 There are some business use cases that Google hasn’t really talked about,
    0:31:01 but the analysts and the people who are interested in this stuff are talking about,
    0:31:05 and I can just go through a few of them that I think could be really important.
    0:31:14 One is healthcare. Unlike a classical computer, these quantum computers can simulate
    0:31:22 molecular development at mass scale. In theory, they could revolutionize the pharmaceutical
    0:31:27 industry. At least that is what is being said about quantum computers. It’s something that
    0:31:31 classical computers are not good at. The second one, this is the one I find most interesting,
    0:31:41 is encryption. This could massively affect Bitcoin, because cryptography is predicated
    0:31:47 on binary code. That’s how the Bitcoin mining system works, and that’s what makes it so impenetrable.
    0:31:55 With a quantum computer, you could essentially break any encryption system in the world,
    0:32:03 including Bitcoin. Now, to be fair, to mine all the Bitcoin in the world today, you’d need a
    0:32:10 quantum computer with a capacity of 13 million qubits. The Willow chip has a qubit capacity of
    0:32:17 only 105, so we’re not there yet, but theoretically, we could get there. That is also why we saw a dip
    0:32:22 in the price of Bitcoin the day this was announced. I think a lot of people in the Bitcoin world
    0:32:28 went, “Holy shit, what if this thing could crack into the Bitcoin network in a day?”
    0:32:35 It can’t yet, but at some point, it could. I hate to say it. I would enjoy that. I know
    0:32:39 that’s an awful thing to say. I would enjoy it, too. If all Bitcoin became hackable,
    0:32:45 why does that make me happy? Why does that make me happy? Oh, gosh. I think those are my two
    0:32:53 most interesting use cases. My takeaway here, this could be a really big deal,
    0:32:59 but major emphasis on could, because it’s not totally clear to anyone what the timeline on this
    0:33:04 is. We hear about a lot of powerful technologies out there that could revolutionize industries.
    0:33:10 We don’t know when it’ll happen or what it’ll look like. My prediction downstream of that is that I
    0:33:15 think quantum is going to become the new corporate buzzword. I think it’s going to become the new
    0:33:21 vehicle to make these very, very big promises that could pan out, but similar to crypto and
    0:33:27 similar to AI, you’re not accountable to delivering actual results, because it’s so far off in the
    0:33:33 future. This, to me, is like a CFO’s dream. If you can just build a little quantum research
    0:33:38 lab in your company, you don’t even need to generate revenue from it, you will likely
    0:33:42 drastically increase your multiple overnight, and it does not need to be reflected in your
    0:33:47 financial results. My takeaway from this, I think this is real. I think this is cool,
    0:33:53 but I predict a huge hurricane of corporate bullshit that is going to come rolling in hard,
    0:33:56 and I think the name of that hurricane will be quantum.
    0:33:59 I don’t know if you knew this, but here at PropG, we raised $7 billion two years ago,
    0:34:03 and we’ve been experimenting with quantum computing, and it’s really starting to pay off.
    0:34:08 Actually, you’re not a real person. Actually, it’ll be AI. Look, I did what I always do. I turned
    0:34:12 to AI, and I said, “Give me the difference between AI and quantum computing,” and they said, “Okay,
    0:34:18 AI is the simulation of human intelligence and machines that can learn, reason, and make decisions.”
    0:34:23 Example applications, image recognition, natural language processing, autonomous vehicles,
    0:34:30 and recommendation systems. Quantum computing leverages the principles of quantum mechanics,
    0:34:37 including superposition and entanglement to perform calculations much faster than classical
    0:34:42 computers for certain problems. Example applications, cryptography, optimization problems,
    0:34:50 material science simulations, and drug discovery. So, yeah, there you go, and they use this word,
    0:34:59 cubits all over again. More importantly, how do people invest around this? I heard,
    0:35:04 we saw we had in the notes, Rosetti computing. They make chips for quantum computing, much like
    0:35:11 NVIDIA builds chips for AI, started by an IBM quantum scientist. That stock is up sevenfold this
    0:35:16 year. Another quantum computing bet is INQ is pursuing a different type of quantum computing
    0:35:20 than Google, one that could potentially be better for precise measurements in fields,
    0:35:26 including aerospace and defense. INQ is already monetizing quantum, secured a $55 million dollar
    0:35:30 contract with the United States Air Force Research Lab this year, and offers quantum computing through
    0:35:36 Google Cloud, AWS, and Azure. Revenues have increased 90% this year. The stock is up 150%
    0:35:46 year to date. So, this feels pretty cutting edge, but I love what you’ve said, that there’s going
    0:35:55 to be now quantum washing. But also, I wonder if these guys, as much as their stock has been up,
    0:36:00 I wonder if these quantum computing sectors are going to register anything resembling
    0:36:07 the kind of AI, Lollapalooza, in terms of value here. We’ll be right back with a look at the
    0:36:12 World Cup in Saudi Arabia. If you’re enjoying the show so far, hit follow and leave us a review on
    0:36:28 Prof2Mockets. In 100 meters turn right. Actually no, turn left. There’s some awesome new breakfast
    0:36:34 wraps at McDonald’s. Really? Yeah. There’s a sausage bacon and egg, a crispy seasoned chicken one,
    0:36:39 mmm, a spicy end egg, worth the detour. They sound amazing. That they taste amazing too.
    0:36:45 Wish I had a mouth. Take your morning into a delicious new direction with McDonald’s new
    0:36:51 breakfast wraps. Add a small premium roast coffee for a dollar plus tax at participating McDonald’s
    0:37:02 restaurants. Ba-da-ba-ba-ba. Wolves and dogs are pretty closely related. They actually share 99.9%
    0:37:10 of their genetics. But even when they’re just a few months old, even when they’re raised by
    0:37:15 human scientists, wolves are pretty different from dogs. They start biting you in the ears when
    0:37:20 you’re lying down. If you don’t sit up fast enough and you hear this wonderful noises with little
    0:37:27 and then they chomp you in the ear and you’re like, oh. And when they grow up, these differences get
    0:37:36 even bigger. Dogs are our friends. Wolves are hunters. If I had a sore shoulder, I wouldn’t go
    0:37:41 in with the adult wolves, even if I’d raised them because it could trigger their hunting behavior.
    0:37:47 This week on Unexplainable, how did we get the nice, friendly dogs we know and love today
    0:37:52 from wolves? Follow Unexplainable wherever you listen for new episodes every Wednesday.
    0:38:00 On Wednesday of last week, a man was shot in the United States, but this was not your average
    0:38:06 shooting. Almost immediately, people were celebrating his death and not just the people you’d expect,
    0:38:13 there were moms on Facebook making jokes about it. There were several of those horny copypasta text
    0:38:19 messages circulating around. There was a United Healthcare Shooter Lookalike contest over the
    0:38:27 weekend in Manhattan. At least one person got a tattoo of the suspect. On Monday, Luigi Mangione
    0:38:34 got arrested and then things really got nuts. He went from a few dozen Twitter followers to 300,000
    0:38:41 overnight. People were thirsting for his six-pack. Luigi Mangione is brat. The McDonald’s, where he
    0:38:46 was arrested, has been review-bombed. People are saying there are rats behind the counter. People
    0:38:51 are saying Popeye’s employees would have helped him get rid of the gun. Someone’s got some explaining
    0:38:56 to do, and it’s us. It’s Today Explained. Every weekday, never on the weekends.
    0:39:09 We’re back with Prof. G. Markets. Saudi Arabia will host the 2034 World Cup, marking a key step
    0:39:14 in the country’s plan to establish itself as a global leader in sports. Through its sovereign
    0:39:18 wealth fund, the country has invested billions in a range of sports, including golf, boxing,
    0:39:24 e-sports, and Formula One. The fund is also close to finalizing a $1.5 billion deal
    0:39:31 for a 6% stake in the PGA Tour. Finally, we can stop talking about quantum computing,
    0:39:37 Scott, and get back to what we’re really good at, which is football. We’ve talked a lot about
    0:39:42 Saudi Arabia on this podcast. It’s expanding influence in the sports world. Your reactions to
    0:39:48 Saudi Arabia, I’m not sure anyone thought this wouldn’t happen, but Saudi Arabia is officially
    0:39:53 the host of the 2034 World Cup. Well, first off, there are a few organizations
    0:40:00 that have this veneer of credibility that are more corrupt than these international sports
    0:40:04 organizations because they operate in this sort of Nether-Netherland, the International Olympic
    0:40:09 Committee, and FIFA really takes the crown. If you were going to have countries bid,
    0:40:17 you would want to avoid some sort of conflict? Well, no. FIFA announced a $400 million sponsorship
    0:40:23 deal with Saudi Aramco, Saudi Arabia’s national oil company, the most profitable firm in the
    0:40:33 world, earlier this year. My guess is that was kind of a down payment. The rest of the world
    0:40:40 said, okay, when you show up and you’re bidding on a piece of art and Bill Gates shows up and says,
    0:40:43 “Oh, it’s my dream to own this piece of art.” You might as well go home.
    0:40:50 This is what’s happened here. I think this may be the first time that there was only one nation
    0:40:57 bidding. I think every other nation that was thinking about bidding thought, we’re not going
    0:41:01 to pull 1,100 people together and former governors and get everyone Jonesed up to put
    0:41:08 together the ultimate bid and then host you first class. The FIFA corrupt committee that comes over
    0:41:12 and they get all these great dinners and they’ve said, “No, we’re just not going to bid.”
    0:41:18 And also, realistically, it’s worth more to the kingdom than any other country in the world,
    0:41:24 because these are coming out events. This is a way of highlighting where for real you should come
    0:41:31 here. I remember the Olympics when it was the opening ceremonies in Barcelona, and I had never
    0:41:36 heard anything about Spain or Barcelona. And then they had this brand new beautiful stadium,
    0:41:40 and they had this runner, the lighting in the Olympic torch, and it was this ridiculously
    0:41:46 hot guy wearing no shirt, and he’s running and he stops outside of the stadium, and you see this
    0:41:54 amazing stadium, and the guy picks up a fucking bow and arrow, and then he pulls it back and you see
    0:42:02 his unbelievably ripped torso, and then he looks at the camera and then he nods and he detenses the
    0:42:07 bow and arrow, and he puts the arrow down, and he inflames it, and then he pulls it back,
    0:42:15 and he pulls the thing back for dramatic effect, like it’s about to snap, and he fires the thing,
    0:42:23 and this fucking flaming arrow flies from outside of the stadium over the top of the stadium
    0:42:32 into like this six foot semi-circle of incendiary, lights it, and then it runs up to the Olympic
    0:42:40 flame, torches it, and I’m like, I’m going to fucking Barcelona. I mean, it was just so amazing,
    0:42:46 and then most recently the Paris Olympics have brought kind of new riz to Paris. I remember
    0:42:50 watching some of the sports and at the Olympics and thinking, it’s time for me to get back to Paris.
    0:42:57 Those people just, they just understand style and grace and romance. These are coming out parties.
    0:43:04 I don’t think, I would bet 97% of the world’s population hadn’t heard of Qatar until the World Cup,
    0:43:10 so Saudi Arabia has all of these immense projects coming online. They want to transition to a
    0:43:17 knowledge-based economy, educational institutions, tourism services, and this will be their way of
    0:43:24 bringing the wealthiest people in the world and the eyeballs of the rest of the world to the
    0:43:30 kingdom, and that’s worth a lot of money to them, and it wasn’t, everybody knows about the United
    0:43:36 States. Most people know about Germany, so while they might be willing to spend 10, 20, 30 billion,
    0:43:40 I mean, I gotta think, if Qatar spent a quarter of a trillion dollars or 250 billion, I wouldn’t
    0:43:44 be surprised that the kingdom spends half a trillion dollars on these games. All I know is
    0:43:51 we are going at, and it’s going to be amazing. It’s going to be amazing, and I’m betting on,
    0:43:54 I think Team England is finally going to have their deal here.
    0:43:56 It’s definitely going to happen. Cole Paul, not at home.
    0:43:57 It’s coming home.
    0:43:58 It’s going to come home.
    0:43:59 It’s coming home.
    0:44:05 What you’re describing there is, I mean, you said being on the world stage like that is worth a lot
    0:44:10 of money to them. I think this is the interesting question here. It’s like, what is this worth?
    0:44:16 Is it worth it to do this? If you look at the actual ROI, the return on investment
    0:44:21 of these global sports tournaments, there’s a study from the University of Lausanne,
    0:44:27 which looked at every Olympic Games and every World Cup between the years 1964 and 2018
    0:44:34 to answer that question. What they found is that 95% of the time, you lose money. The average ROI
    0:44:40 for the Olympics and for the World Cup was negative 38%. There were only three competitions
    0:44:46 in history that turned out to be profitable, and those were the 1984 LA Olympics, the 2010 Vancouver
    0:44:51 Winter Olympics, and the 2018 Russia World Cup, and every other tournament lost money.
    0:44:58 Now, to be fair, this is only focusing on the revenues that can be directly attributed to the
    0:45:02 tournament. It’s the ticket sales and the broadcasting rights and the sponsorships, etc.
    0:45:06 What it doesn’t measure is what you’re talking about, which is the soft power,
    0:45:11 the idea that you’re seeing these countries, and then maybe you want to go there and you want to
    0:45:18 spend some money there. I don’t know what it is. My question to you is on soft power, because
    0:45:26 I’m naturally a little skeptical of soft power because of the fact that it is so hard to measure,
    0:45:33 and I get the feeling that we get a little carried away with the glitz and the glamour and the fame of
    0:45:42 it all. My question to you is how does being on the world stage actually translate into legitimate
    0:45:48 economic activity and long-term GDP growth? I get the sense that you believe this is actually a
    0:45:53 very good idea economically for Saudi Arabia. Oh, it’s enormous. The last time I was in Riyadh,
    0:45:58 what I noticed was they put on a lunch and invited me, and they had all these entrepreneurs, and I
    0:46:05 thought I’m going to meet all these Saudis. I did meet some domestic entrepreneurs, a bunch of kids
    0:46:11 who had gone to US schools and then come back to Saudi. What I was shocked by, I met hundreds of
    0:46:17 entrepreneurs who were like, “Yeah, I started a specialized glass company, glass that goes on
    0:46:24 components and iPhones in Seoul, and I moved here,” because I thought the quality of life would be
    0:46:28 better, and basically the kingdom guaranteed me that they would buy everything I could produce.
    0:46:37 I met all these entrepreneurs from Germany. The bottom line is money and growth are a flame,
    0:46:43 and human capital, especially young human capital, is a moth. What you said about soft power is that
    0:46:50 companies that demand specific attribution oftentimes just shouldn’t be in the business
    0:46:55 of brand building, because the thing about brand building is that Philip Morris was never really
    0:47:02 able to directly, they knew that convincing people that if they smoked marble reds, that they could
    0:47:08 relate to and were more like a man with a deeply chiseled jaw, riding an apple loose,
    0:47:17 but they could never reverse engineer a specific billboard to 95 point gross margins on a pack
    0:47:23 of cigarettes that people were paying $4 for that cost $0.20 to produce. Brand building,
    0:47:29 quite frankly, is a little bit about taking a leap of faith, believing that if the intangible
    0:47:35 association surrounding a product, a service, or even a nation will create more awareness,
    0:47:41 more trial, because you can bet MBS looks at Dubai and what they’ve built there and says,
    0:47:46 “Fuck, how did we let that happen? We’re a bigger economy. We have more money.”
    0:47:52 I’m pretty sure that the mandate he’s given to his ministers of infrastructure or development is
    0:47:59 like, “I want Dubai to seem like a fucking cow town after we’re done. I want everyone coming
    0:48:05 here.” The good news about the Kingdom of Saudi Arabia is they have what feels like infinite
    0:48:09 capital right now. The bad news is it’s running out in 30 or 40 or 50 years, and they’re smart,
    0:48:16 they know it. They’re like, “We need to transition from a fossil fuels-based economy
    0:48:21 to a services tourism-based economy.” That’s the bad news. We need to do it. The good news is
    0:48:28 you have a blank check to get it done, but branding is all about taking a leap of faith
    0:48:34 on these intangible emotions. All bet the year after the World Cup, you’re going to see tens of
    0:48:40 thousands of small and big businesses, and the key to all this, the secret sauce, human capital,
    0:48:48 go, “Honey, would you be willing to move to Riyadh?” and people go for the first time,
    0:48:54 “Yeah.” At the bottom, when you’re worth billions of dollars spending money on whatever it is,
    0:48:59 a finely tailored suit, it doesn’t mean anything. Even if that finely tailored suit is 10,000 bucks
    0:49:05 and no one would pay for that, it doesn’t matter. They have the money. What they need is to transition
    0:49:13 their economy. This is probably going to be a good investment, distinct of how much it costs.
    0:49:19 I think the distinction there is I agree with you when you have a lot of money. It’s not a big
    0:49:25 deal to buy a $10,000 suit, but it would be a little crazy to buy a million-dollar suit,
    0:49:28 and we have no idea how much they’re going to spend on this thing.
    0:49:38 If you look at how much Qatar spent, they spent $220 billion. I would bet that Saudi Arabia’s going
    0:49:45 to spend way more than that. I think the way you frame it there is totally accurate. It’s like
    0:49:52 they know that this is immediately going to be in the red from an expenses perspective,
    0:49:58 but they’re looking at the long-term payoff and the long-term benefits. Let’s say they spend
    0:50:02 like a quarter of a trillion dollars on this. I think they’ll spend more, but let’s say they spend
    0:50:09 that much. That is a quarter of a trillion-dollar billboard, essentially. Basically, it’s a giant
    0:50:19 ad. I think the question is, is that ad worth it? I feel pretty somewhat convinced that it might pay
    0:50:23 off, that it might be worth it based on your analysis there, but I think the key takeaway for
    0:50:32 me is this is no more than an ad. No more than an ad? That’s everything. That’s awareness,
    0:50:39 unearned margin. Let me just go back to brand building. I don’t know what Russia spent on the
    0:50:45 World Cup, dramatically less than $220 billion, but I went to games in Moscow and St. Petersburg.
    0:50:49 I remember thinking St. Petersburg was arguably one of the most beautiful cities I’d ever been to,
    0:50:54 walked around, there’d be squares where old people were dancing, and I just had such a positive
    0:51:01 impression of Russia and specifically St. Petersburg. Now, them incarcerating Americans on
    0:51:07 trumped-up charges, that’s sort of like, okay, I’m not going back to Russia for a while.
    0:51:11 That sort of ruins the ad, exactly. These actions on a political stage
    0:51:16 can wipe out a quarter of a trillion dollars in branding.
    0:51:20 Yeah. Well, let’s just take a moment to talk about the controversies around this,
    0:51:24 because that’s important to the brand here, too. I mean, if people think that this was
    0:51:30 rigged, as many people do, or they think that Saudi Arabia is an unethical country,
    0:51:33 that’s important to this conversation, too. But I’m just going to start with this
    0:51:38 bid evaluation report from FIFA that they released, which I just found so funny.
    0:51:45 It’s this report where they assess all of the viability of all the possible host nations.
    0:51:53 So, first off, they gave Saudi Arabia the highest viability score ever, which is hilarious.
    0:52:00 They said that from a commercial standpoint, the bid is, quote, “very good.” But my favorite
    0:52:07 was their evaluation of the human rights risk, which they determined was, quote, “medium,”
    0:52:10 which is also hilarious.
    0:52:14 Human rights risk of the games or human rights risk of KSA?
    0:52:16 Of the World Cup, of them hosting the World Cup.
    0:52:17 The medium?
    0:52:24 Human rights risk, medium. That was their analysis. But they ultimately landed on the greatest score
    0:52:27 ever given in the FIFA bid evaluation report.
    0:52:29 Yeah, it’s called money, the greatest score.
    0:52:30 Exactly.
    0:52:39 I’ll go. 100% I’ll go. I can’t wait. I literally can’t wait. And also, I actually quite like
    0:52:40 the kingdom and think they’re doing good things.
    0:52:48 But people hear your views on Saudi Arabia, and they get upset when you defend them.
    0:52:52 And the reason they, I mean, the things that people focus on, there’s one,
    0:52:57 the killing of Jamal Khashoggi. We’ve talked about that. There’s migrant worker conditions.
    0:53:02 I would argue that that’s in basically any country.
    0:53:04 But you’re leaving out treatment of women.
    0:53:07 Yeah. There’s discrimination of women, which they are improving on.
    0:53:13 But still not great. But then there’s also the discrimination against gays,
    0:53:15 which they are definitely not improving on.
    0:53:21 So the penalty for homosexuality in Saudi Arabia today is still, in some cases, death.
    0:53:29 And in combination with the fact that a lot of people think this voting system was rigged,
    0:53:34 which it probably was, they were the only bidder, I think a lot of people are saying,
    0:53:42 there’s foul play here. What I would say, I think we all agree there is foul play here,
    0:53:49 in some sense. The question is, how bad is it? Like, how bad are the human rights abuses,
    0:53:54 and how bad is the corruption? And is it bad enough that we will start to see
    0:54:00 mass boycotting of this World Cup? Because on this podcast, we’re not going to evaluate
    0:54:03 the ethics of things. We’re going to evaluate the economics of things.
    0:54:07 And so what I’m interested in, and I’d like to get your view, is do you think
    0:54:15 the human rights stuff and the corruption stuff is bad to the point that people are actually
    0:54:19 not going to go to this thing, and they’re not going to watch it? Or is this another one of
    0:54:23 those situations where we talk about it a lot online? Maybe we see some protests,
    0:54:26 but at the end of the day, everyone shows up and everyone makes money.
    0:54:36 Oh, entirely the latter. And also, this stuff’s important, and public pressure and international
    0:54:45 pressure is important. And I worry one of the things I don’t like about the most recent election,
    0:54:50 I have trouble waving my finger in anyone’s face around women’s rights right now.
    0:54:56 We’re the only nation that’s taken away a women’s right. Typically, every other nation in the world
    0:55:02 when they grant women rights, they get to hold on to them. And the kingdom right now, in my opinion,
    0:55:06 is reforming faster than any nation in the world. And every six months,
    0:55:13 MBS rolls out new reforms. Women in the kingdom used to need the permission of their husbands to
    0:55:18 travel. They’ve done away with that. They couldn’t drive. They can now drive. That may not sound
    0:55:22 like a big deal, but I’m looking at the slope of things. In addition, I want to be clear,
    0:55:28 I think they murdered Khashoggi. The question is, all right, they did it. I think they paid a huge
    0:55:34 price for it. Does that mean we’re never going to do business with them again? And let me go even
    0:55:38 further. I think there’s less antisemitism in the kingdom right now than there are pockets in the
    0:55:44 United States. I think the kingdom is probably going to normalize relations with Israel. This
    0:55:49 is a complicated issue. I don’t want to pretend to have moral clarity around this. The question is,
    0:55:54 do I think people are going to go and corporations are going to headquarter there?
    0:56:00 Absolutely. This will be the most successful World Cup in history. Because at the end of the day,
    0:56:04 Ed, and this isn’t the way the world should be, the way the world is, money wins.
    0:56:11 And they’ll put on an amazing show and they will clean up their act or they will try to. And also,
    0:56:15 it begs a bigger point, are human rights going to be better or worse
    0:56:22 if the World Cup is in the kingdom? I would argue they’re going to be better. I would argue when
    0:56:30 they are on a global stage that they have more motivation and incentive to improve, to continue
    0:56:36 to improve and head in the right direction. I’m more around engagement than sitting and waving
    0:56:44 your finger as a 15-year-old in Mississippi who’s raped, doesn’t have access to terminate a pregnancy.
    0:56:48 We have gotten so far afield here, Ed. Let’s go back to talking about quants. Cubits.
    0:56:53 Cubits. Yeah, I think just to summarize what you’re saying there, it’s like
    0:56:59 they are trending in the right direction. You cannot argue that. They definitely are on the
    0:57:05 right trajectory when it comes to human rights. Are they doing that for ethical reasons? Probably
    0:57:10 not. But I think they’ve looked at the rest of the world and they’ve seen that, generally speaking,
    0:57:15 a nation that has strong human rights laws and that treats its people fairly,
    0:57:20 generally speaking, those countries get rich. I think that’s pretty much the play here.
    0:57:27 100%. Okay, we want to participate in this economy. We’re going to go lean into human rights,
    0:57:33 not because we necessarily want to for our people. I genuinely think that. I think we’re
    0:57:38 going to do it because it’s going to make us some good money. That’s worth it. I think that’s what’s
    0:57:43 going to happen here. Let’s take a look at the weekend. We’ll hear the Fed’s interest rate decision
    0:57:48 for December and we’ll also see earnings from Nike and FedEx. Scott, do you have any predictions?
    0:57:52 Well, my prediction is that Metta’s next earnings call, which isn’t until February,
    0:58:01 is going to be just blow away again expectations because that notion that if you put a frog in
    0:58:06 a boiling water, jumps out. If you put a frog in water and then turn the heat up, it doesn’t know
    0:58:13 it’s being boiled to death. I don’t think we realize just how bad the rage has become in the
    0:58:20 United States. As someone, I only spend probably two weeks every two months there. It’s like when
    0:58:25 you come home, Ed, and you haven’t seen your kids for a while, and this was one of the most
    0:58:28 rattling things that happened to me when I used to go on business trips for two or three weeks,
    0:58:33 I could notice, I would always poke my head in and when they’re sleeping and a couple of times,
    0:58:38 I’m like, “Oh my God, he’s grown.” That would rattle me that I was spending too much time on
    0:58:42 the road, whereas when I’m with them every day, I don’t perceive them growing because it’s incremental.
    0:58:47 The interrupted cadence of living in London and only being in the US
    0:58:52 once every couple of months, I have noticed a dramatic increase in what I’ll call
    0:59:00 community rage or public rage. Everyone is pissed off. Everyone is dissatisfied with each other,
    0:59:10 with policies, with government, with the world. I think that is the primary signal for profitability
    0:59:15 at Metta because Metta has figured out that it’s not sex itself in the world of marketing,
    0:59:23 it’s rage. The amount of rage that has been fomented and monetized by Metta has hit a new
    0:59:29 high, I believe, around the election. The proxy or the litmus test or a decent
    0:59:36 blood pressure test for rage in the US is the profitability of Metta and it is fucking off
    0:59:41 the charts right now in their largest market in the US, which I believe means they are going to
    0:59:47 report a just staggering quarter in their next earnings call in February. My prediction,
    0:59:54 another massive beat from Metta based on the fact they have figured out a way to not only
    1:00:01 incent but monetize rage at discord and polarization in the United States, which is at record levels.
    1:00:07 This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate
    1:00:10 producer is Alison Weiss, Mia Silverio is our research lead, Jessica Lange is our research
    1:00:16 associate, Drew Burris is our technical director, and Catherine Dillon is our executive producer.
    1:00:20 Thank you for listening to ProfG Markets from the Vox Media Podcast Network. Join us on Thursday
    1:00:24 for our conversation with Morgan Housel only on ProfG Markets.
    1:00:54 Lifetimes. You help me in kind reunion as the world turns. And the dark flies.
    1:01:00 And love, love, love, love.
    1:01:10 [BLANK_AUDIO]
    2

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    Scott and Ed open the show by discussing why a federal judge blocked Kroger’s acquisition of Albertsons, Warner Bros. Discovery’s decision to restructure its business, and Eli Lilly’s plans to test its GLP-1 drug as a treatment for addiction. Then Ed breaks down Google’s innovation in quantum computing, outlining its potential business use cases. Scott explains why the market is responding positively—even as the broader implications remain unclear. Finally, they discuss Saudi Arabia’s successful bid to host the 2034 World Cup and debate whether it’s a smart long-term investment for the country.

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  • No Mercy / No Malice: Killing the Cat

    AI transcript
    0:00:00 [MUSIC PLAYING]
    0:00:03 Support for the show comes from HubSpot.
    0:00:05 How do you begin to describe your job as a marketer?
    0:00:08 You have to generate leads, create content, and gather data.
    0:00:11 You’re spread way too thin, but HubSpot has a better way.
    0:00:13 With the help of Breeze, HubSpot’s collection
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    0:00:24 KPIs with a new analytic suite.
    0:00:26 And most importantly, you’ll have a way easier time describing
    0:00:27 your job at parties.
    0:00:31 Visit hubspot.com/marketers to learn more.
    0:00:42 Amazon Q Business is the generative AI assistant from AWS
    0:00:45 because business can be slow, like wading through the mud.
    0:00:50 But Amazon Q helps streamline work,
    0:00:52 so tasks like summarizing monthly results
    0:00:54 can be done in no time.
    0:01:00 Learn when Amazon Q Business can do for you at aws.com/learnmore.
    0:01:02 That’s aws.com/learnmore.
    0:01:10 For over 30 years, XPRIZE has been the global leader
    0:01:13 in designing and executing large-scale incentivized
    0:01:14 competitions.
    0:01:17 And through these competitions, they’ve accelerated solutions
    0:01:19 to some of the world’s greatest challenges,
    0:01:23 such as climate change, water scarcity, and healthy aging,
    0:01:24 just to name a few.
    0:01:27 XPRIZE is a catalyst for radical breakthroughs
    0:01:30 that have impacted the lives of millions,
    0:01:32 and they’re just getting started.
    0:01:34 Through the power of incentivized competition,
    0:01:37 XPRIZE can drive scientific discovery, cutting-edge
    0:01:40 innovation, and groundbreaking solutions.
    0:01:42 The future is still ours to create.
    0:01:46 Head to XPRIZE.org to learn how you could help architect
    0:01:48 a future of equitable abundance.
    0:01:56 I’m Scott Galloway, and this is No Mercy, No Malice.
    0:02:01 Jaguar is giving us more proof that the era of brands
    0:02:05 is over, killing the cat, as read by George Hahn.
    0:02:13 Jaguar, a brand that’s been in a coma for years,
    0:02:16 is trying to wake up, and it’s gasping.
    0:02:20 The car-free copy-nothing-kickoff video
    0:02:24 and the rollout of a pink concept EV at Art Basel, Miami,
    0:02:27 have inspired well-earned mockery.
    0:02:30 The launch rivaled Elon’s WeRobot event
    0:02:34 for the all-chip-no-sauce-of-product launch of 2024.
    0:02:38 Getting attention is key to any marketing campaign,
    0:02:41 so mission accomplished, sort of.
    0:02:47 Tata Motors, which owns Jaguar and its stable-mate Land Rover,
    0:02:49 has also succeeded in further eroding
    0:02:53 what’s left of Jaguar’s brand equity.
    0:02:57 Jaguar trashed its iconic logo, all its current models,
    0:03:02 and its traditional promise of speed, power, and elegance.
    0:03:06 In their place is an uninspired and generic brand mark,
    0:03:09 a concept model that will never be put into production,
    0:03:12 and an incomprehensible promise,
    0:03:13 something about good-looking people,
    0:03:16 bright colors, and exotic haircuts.
    0:03:19 A lot has been said about this HBRK study
    0:03:21 that’s writing itself,
    0:03:23 including some predictable culture war bullshit
    0:03:26 about Jaguar having gone woke.
    0:03:28 Most of this misses the larger point,
    0:03:31 which is that Jaguar’s move is further proof
    0:03:33 that the brand age is over.
    0:03:38 Just as doctors have a Hippocratic oath,
    0:03:42 chief marketing officers ought to have a similar pledge.
    0:03:44 First, do no harm.
    0:03:48 I’ve advised lots of big consumer brands
    0:03:49 about their marketing,
    0:03:53 and I’ve noticed that CMOs recognize their days are numbered
    0:03:55 and are desperate to show visible motion,
    0:03:58 whether it makes sense or not.
    0:04:01 Often that activity, devoid of progress,
    0:04:04 means spending lots of money on a new agency
    0:04:06 stocked with sharply dressed young people
    0:04:08 who will host events giving awards
    0:04:10 to whoever spent the most money
    0:04:13 across the advertising industrial complex.
    0:04:15 I’m honored to be part of this brand’s history,
    0:04:18 and I’m shocked how well my predecessors
    0:04:22 managed the brand, said no CMO ever.
    0:04:24 The typical incoming speech?
    0:04:28 Thank God I’m here, we need to redo everything.
    0:04:31 Which is usually self-defeating.
    0:04:35 For about 50 years following World War II,
    0:04:38 it was good business to churn out a mediocre product
    0:04:42 and then surround it with emotion, i.e. branding.
    0:04:45 On any given night, about 60% of America
    0:04:47 was in one of three places,
    0:04:50 ABC, CBS, or NBC.
    0:04:52 Via the miracle of TV advertising,
    0:04:55 a few cents worth of peanut paste
    0:04:59 could be transubstantiated into a jar of maternal love
    0:05:02 as choosy mothers choose Jif.
    0:05:05 In the age of the internet,
    0:05:08 network television is in hospice.
    0:05:13 Exhibit A, the proposed merger of Omnicom and Interpublic.
    0:05:17 When I started Profit, a brand strategy consultancy,
    0:05:21 these firms were the alphabets and metas of the economy.
    0:05:23 Now they’re consolidating,
    0:05:27 two emaciated polar bears fighting over fewer seals
    0:05:30 and sharing a melting piece of ice.
    0:05:34 The previous sentence is both awful and wonderful,
    0:05:35 mostly the former.
    0:05:39 Brands mean a lot less than they used to.
    0:05:43 Consumers now have a range of weapons of mass diligence
    0:05:45 to help them find and rate products,
    0:05:49 starting with Google and social media.
    0:05:52 I travel constantly, so I used to rely on well-known brands
    0:05:55 when booking hotels in cities I didn’t know well.
    0:05:58 The name Mandarin Oriental, or Four Seasons,
    0:06:01 meant I could consistently expect and get
    0:06:05 a seven or eight level customer experience.
    0:06:09 Lately though, I’ve been using ChatGPT and other AI tools
    0:06:13 to find nines that better fit the moment and me.
    0:06:16 The gym at the Soho House Berlin,
    0:06:19 the rooftop restaurant at the Waldorf in Beverly Hills,
    0:06:22 the bar at Chiltern Firehouse.
    0:06:26 If I sound like a privileged douchebag, trust your instincts.
    0:06:31 The internet has diminished the power of even strong brands
    0:06:34 and it’s penetrated the shield of good branding
    0:06:39 from mediocre products like Nike, Intel, Target, et cetera.
    0:06:43 A product or service that cannot fulfill its promise
    0:06:46 to make you smarter or sexier can’t reverse its fortunes
    0:06:49 by listening to Don Draper.
    0:06:52 And inventing and refining a great product,
    0:06:56 fixing its supply chain and improving your customer service
    0:06:59 is a lot more work than turning to mid-journey
    0:07:01 and asking for a new logo.
    0:07:06 Jaguar’s problem for a long time has been products
    0:07:09 that didn’t live up to the brand promise.
    0:07:12 Well after its swinging London ’60s heyday,
    0:07:15 Ford bought the company in 1989
    0:07:18 and it’s now owned by India’s Tata.
    0:07:21 It still manufactures the car in Coventry, UK,
    0:07:23 thus technically preserving the Britishness
    0:07:25 that’s key to its brand identity.
    0:07:30 Although they’ve improved, the cars continue to be dogged
    0:07:34 by a lingering reputation as mechanical nightmares.
    0:07:37 Anybody who drove one was making the statement,
    0:07:39 “I’m a gangster who probably owns two of these status symbols
    0:07:42 because one is always in the shop.”
    0:07:47 Style-wise, Jaguar’s current lineup has little of the illan
    0:07:51 of the legendary E-type or other classic models.
    0:07:54 In terms of sales in the premium car market,
    0:07:57 Jaguar is an afterthought behind category leaders
    0:07:59 BMW and Audi.
    0:08:01 With a few exceptions,
    0:08:03 Jaguar hasn’t been able to make anything
    0:08:06 in the $50,000 plus price range that anybody wants to buy.
    0:08:12 Jaguar’s current business response to this makes sense.
    0:08:15 Management decided to wind the company down
    0:08:16 and relaunch it.
    0:08:19 Jaguar is ending production of its three current models
    0:08:24 and retooling to produce an all-new, all-electric line.
    0:08:27 It’s also decided to abandon the premium market
    0:08:30 and go further upscale into luxury cars priced
    0:08:33 at around $400,000.
    0:08:36 This is a smaller market with fatter margins,
    0:08:38 so the company is closing some dealerships.
    0:08:42 All of which points to something that’s gone mostly
    0:08:46 unremarked in the chatter about Jaguar’s rebrand.
    0:08:48 Jaguar doesn’t see any growth selling
    0:08:50 to lawyers and dentists,
    0:08:51 but it does see a future selling
    0:08:54 to entrepreneurs and financiers.
    0:08:57 It’s going to be at least a year, however,
    0:09:00 before any new era Jaguars go on sale.
    0:09:03 No one outside the company knows how they will look
    0:09:05 or what will be under the hood.
    0:09:09 The clunky pink Type 00 sports tank Jaguar introduced
    0:09:12 in Miami is a concept car.
    0:09:14 It will never go into production.
    0:09:16 I’ve been to a lot of car conventions
    0:09:18 and seen a lot of concept cars.
    0:09:20 In my view, they’re a waste of effort and money,
    0:09:22 no matter how sexy.
    0:09:25 They’re shiny, one-off marketing props.
    0:09:29 Ivanka Trump is seriously more likely to be president
    0:09:32 than the Tesla RoboVan is ever to be produced.
    0:09:36 So with a dark year ahead of it
    0:09:38 and no new product ready to show customers,
    0:09:43 Jaguar decided to fix the one thing that wasn’t broken.
    0:09:47 The new brand mark makes it seem Jaguar is relaunching
    0:09:50 as an AI consulting firm.
    0:09:53 The logo looks as if it was designed by AI
    0:09:56 and never tested with real people.
    0:09:59 According to one respondent to an entirely
    0:10:02 unscientific survey I conducted on Instagram,
    0:10:06 it, quote, would be a great logo for a kitchen knife set,
    0:10:07 unquote.
    0:10:12 One of the most precious things a company can possess
    0:10:16 is a powerful logo, one that imprints itself on the eye
    0:10:19 and instantly tells the brand story.
    0:10:22 Humans are visually oriented.
    0:10:25 Written language is only about 5,000 years old
    0:10:28 and the printing press is less than 600 years old,
    0:10:31 but visual communication via drawn or painted images
    0:10:35 dates back to our Neanderthal ancestors.
    0:10:40 That’s right, it may even predate our existence as a species.
    0:10:45 We process visual information about 60,000 times faster
    0:10:47 than we do words.
    0:10:51 Researchers at MIT once estimated that the human brain
    0:10:53 can correctly identify an image
    0:10:55 in as little as 13 milliseconds.
    0:11:00 When I talk about logos in my marketing class,
    0:11:02 I demonstrate their power by asking students
    0:11:07 if they can identify a mark using just their peripheral vision.
    0:11:11 Great logos, the Nike Swoosh, the McDonald’s Arches,
    0:11:14 the Mercedes three-pointed star,
    0:11:18 are immediately recognizable even almost outside
    0:11:19 our plane of vision.
    0:11:23 An effective logo needs to be meaningful,
    0:11:27 resonant, distinctive, and scalable.
    0:11:31 Jaguar’s pouncing cat, which it called the leaper,
    0:11:33 was all that.
    0:11:36 There are a few things in nature stronger
    0:11:39 and more agile than a jaguar.
    0:11:42 As sleek and beautiful as they are lethal,
    0:11:43 they’re the apex predator
    0:11:46 of South America’s jungles and deserts.
    0:11:51 Stealthy and fast, they kill by pouncing from behind
    0:11:54 and piercing their prey’s skulls with jaws and teeth
    0:11:58 capable of penetrating artillery shells.
    0:12:01 Also, they’re the only animals that, when hunted,
    0:12:05 will turn around and hunt their hunters.
    0:12:07 Not really, but go with it.
    0:12:09 It’s on brand for the cat.
    0:12:14 Jaguars look arrogant as fuck and rightfully so.
    0:12:17 The old logo and mark told that story.
    0:12:19 The new logo says,
    0:12:23 “We hired some MIT grads who, for $800,000,
    0:12:26 told us to lay off everyone in our customer service department
    0:12:28 and replace them with Salesforce’s agent force.”
    0:12:33 Jaguar’s leaper now survives
    0:12:36 only in a faint echo of the original,
    0:12:39 the negative space in a field of horizontal lines
    0:12:43 on a small side panel of the Type 00.
    0:12:48 To take the greatest visual metaphor in automotive history
    0:12:52 and kill it is to destroy shareholder value.
    0:12:55 It’s the essence of CMO malpractice.
    0:12:57 It’s just as stupid and wasteful
    0:13:00 as if Disney responded to a spate of weak releases
    0:13:03 by taking Mickey, Moana, Darth Vader,
    0:13:05 and Elsa out and shooting them.
    0:13:08 It’s also a rejection of everything
    0:13:12 that ever made Jaguar, Jaguar.
    0:13:15 Not just the grace and power of the animal,
    0:13:17 but also the brand’s Britishness.
    0:13:23 There’s nothing feline or rule Britannia about the Type 00.
    0:13:25 And for all that talk about copying nothing,
    0:13:28 the car’s silhouette is reminiscent
    0:13:30 of the Rolls-Royce Spectre.
    0:13:34 And its sharp edges and lines recall the Cybertruck.
    0:13:37 The Jaguar people who signed off on all this
    0:13:40 richly deserve to have their careers pounced on.
    0:13:45 Branding is about differentiation
    0:13:48 and creating a sense of scarcity.
    0:13:50 That means leaning into whatever you have
    0:13:53 that makes you stand out.
    0:13:56 If you’re going bald, shave your head completely.
    0:13:59 If you’re a tall woman, wear heels.
    0:14:02 If you need glasses, get the biggest pair you can find.
    0:14:06 Jaguar is abandoning its differentiators
    0:14:08 while at the same time trying to enter
    0:14:10 the high-end luxury market,
    0:14:14 where being singular is the whole shooting match.
    0:14:18 The higher you go in price, the more eccentric it gets.
    0:14:23 In my view, Jaguar should not have spent a dollar
    0:14:26 on marketing before it had an inspiring,
    0:14:28 ready-to-ship product to show the public.
    0:14:31 The companies that have added the most value
    0:14:36 in the past 10 years barely advertise at all.
    0:14:41 Netflix now has a market cap of about $400 billion.
    0:14:45 In 2014, it was about $21 billion.
    0:14:48 Alphabet’s market cap 10 years ago
    0:14:52 was roughly $390 billion.
    0:14:57 Today, it is $2.5 trillion.
    0:15:02 Those companies and others took dollars out of advertising
    0:15:04 and put them into making better products
    0:15:07 and getting them to customers faster and cheaper
    0:15:08 than their competitors.
    0:15:13 Amazon didn’t win e-commerce with a marketing campaign.
    0:15:15 It won by doing the hard work of guaranteeing
    0:15:18 free delivery in 48 hours.
    0:15:22 Others have won by going asset light.
    0:15:26 NVIDIA uses suppliers for all of its manufacturing.
    0:15:30 She-In, the fastest growing apparel company in the world,
    0:15:33 has no stores and no warehouses.
    0:15:38 It’s not too late for Jaguar to ditch its rebrand
    0:15:40 and start all over again with a strategy
    0:15:43 where a great product is not an afterthought
    0:15:45 to a marketing campaign.
    0:15:49 This is, in a way, an opportunity to announce
    0:15:51 that after a huge outpouring of goodwill
    0:15:53 toward the iconic metaphor,
    0:15:57 they are going old coke and reverting.
    0:16:00 However, we shouldn’t hold our breath.
    0:16:03 The current landscape of reality TV stars
    0:16:06 and misinformation has rid the corporate world
    0:16:09 of one important and simple phrase.
    0:16:11 We fucked up.
    0:16:16 – Life is so rich.
    0:16:31 – Support for this episode comes from AWS.
    0:16:34 AWS Generative AI gives you the tools
    0:16:36 to power your business forward
    0:16:37 with the security and speed
    0:16:39 of the world’s most experienced cloud.
    0:16:42 (upbeat music)

    As read by George Hahn.

    Killing the Cat

    Learn more about your ad choices. Visit podcastchoices.com/adchoices

  • Sports Betting, Challenges Facing Young Men, and The Fall of Sam Bankman-Fried — with Michael Lewis

    AI transcript
    0:00:03 Support for the show comes from ServiceNow,
    0:00:05 the AI platform for business transformation.
    0:00:07 You’ve heard the big hype around AI.
    0:00:09 The truth is AI is only as powerful
    0:00:11 as the platform it’s built into.
    0:00:13 ServiceNow is the platform that puts AI
    0:00:15 to work for people across your business,
    0:00:18 removing friction and frustration for your employees,
    0:00:20 supercharging productivity for your developers,
    0:00:22 providing intelligent tools for your service agents
    0:00:24 to make customers happier.
    0:00:27 All built into a single platform you can use right now.
    0:00:29 That’s why the world works with ServiceNow.
    0:00:33 Visit servicenow.com/ai4people to learn more.
    0:00:38 Support for the show comes from HubSpot.
    0:00:40 How do you begin to describe your job as a marketer?
    0:00:43 You have to generate leads, create content and gather data.
    0:00:47 You’re spread way too thin, but HubSpot has a better way.
    0:00:48 With the help of Breeze,
    0:00:51 HubSpot’s collection of AI tools and features,
    0:00:53 like Content Remix, turn one piece of content
    0:00:56 into a suite of assets, pinpoint the best prospects
    0:00:59 and level up your campaign’s KPIs with a new analytic suite.
    0:01:01 And most importantly, you’ll have a way easier time
    0:01:03 describing your job at parties.
    0:01:07 Visit hubspot.com/marketers to learn more.
    0:01:15 Join Capital Group CEO, Mike Gitlin,
    0:01:17 on the Capital Ideas Podcast.
    0:01:20 In unscripted conversations with investment professionals,
    0:01:24 you’ll hear real stories about successes and lessons learned,
    0:01:26 informed by decades of experience.
    0:01:29 It’s your look inside one of the world’s most experienced
    0:01:31 active investment managers.
    0:01:34 Invest 30 minutes in an episode today.
    0:01:36 Subscribe wherever you get your podcasts.
    0:01:39 Published by Capital Client Group, Inc.
    0:01:43 – Episode 328.
    0:01:45 328 is the country code belonging to Guyana.
    0:01:47 In 1928, Mickey Mouse first appeared
    0:01:49 in the sound cartoon Steamboat.
    0:01:53 Willie, what’s the difference between Disney+ and U-Porn?
    0:01:55 Disney+ wants you to hate your stepmother.
    0:01:59 Go, go, go!
    0:02:10 – Welcome to the 328th episode of The Prop G-Pod.
    0:02:12 In today’s episode, we speak with Michael Lewis,
    0:02:15 the host of the podcast Against the Rules
    0:02:18 and New York Times bestselling author of several books,
    0:02:21 including The Fifth Risk, Flash Boys, and The Big Short.
    0:02:24 We discussed with Michael the state of sports betting,
    0:02:25 the challenges young men face,
    0:02:28 and the controversy surrounding the book Going Infinite,
    0:02:30 which explores the rise and fall of Sam Bakeman Freed.
    0:02:32 I really enjoyed this conversation.
    0:02:36 He’s a very, simply put, Michael is a great storyteller
    0:02:39 and has written some of the kind of iconic books of our time.
    0:02:40 Okay, what’s happening?
    0:02:43 Home in London before heading to South Africa
    0:02:44 for the holidays.
    0:02:46 I’m super excited.
    0:02:49 I’m taking my sister and her family.
    0:02:51 My sister is turning 50,
    0:02:54 which in the Galloway household means she’s turning 40.
    0:02:56 And love hanging out.
    0:02:57 You know, it’s wonderful.
    0:02:59 So my sister and I never lived in the same household.
    0:03:02 I was raised by a single immigrant mother.
    0:03:05 My dad, that was my dad’s second wife as far as we know.
    0:03:05 Pretty sure there was another one
    0:03:07 that we don’t know about.
    0:03:09 And then he started his third marriage
    0:03:13 while he was married to my mother, bad form, bad form.
    0:03:16 And he married Linda, who is Ashley’s,
    0:03:18 they had a daughter and that was Ashley.
    0:03:19 And Ashley and I always got along,
    0:03:21 but part of it was we didn’t live together.
    0:03:22 So we were just kind of,
    0:03:25 you know, just 10 years difference between the two of us.
    0:03:28 And as we got older, we became kind of,
    0:03:29 it was sort of fun to just sort of wake up
    0:03:32 and realize you had a sibling that you got along with
    0:03:34 and you still felt that familial bond with
    0:03:36 and we had been close siblings.
    0:03:41 And so it struck me how many siblings don’t get along.
    0:03:43 And I think that’s one of my biggest fears about my boys
    0:03:44 is they’re going to grow up
    0:03:46 and for whatever reason not be close.
    0:03:49 But I found that not living with my sibling
    0:03:51 and then waking up and finding out
    0:03:52 you had this intelligent, interesting,
    0:03:56 you know, nice person who felt a bond with you
    0:03:57 was really wonderful.
    0:04:00 It’s also been key in helping take care of my father.
    0:04:04 Anyways, I’m super excited about going to South Africa.
    0:04:05 I love Africa.
    0:04:07 This will be my third time.
    0:04:10 And people say, they say, don’t say Africa.
    0:04:12 That’s like saying North America.
    0:04:15 Every part of Africa I’ve been to, I’ve really enjoyed.
    0:04:17 Anyways, moving on.
    0:04:19 Major shakeup in the advertising world.
    0:04:23 Omnicom announced a $13.25 billion all-stock deal
    0:04:26 to acquire its rival interpublic group.
    0:04:29 The deal would create the world’s largest advertising business
    0:04:31 merging the third largest ad buyer Omnicom
    0:04:33 with the fourth largest interpublic.
    0:04:35 According to 2020 figures,
    0:04:37 the combined entity would generate over $25 billion
    0:04:39 in annual revenue surpassing competitors,
    0:04:41 including WPP and Publixy.
    0:04:43 By the numbers, let’s look at it.
    0:04:45 WPP registered 19 billion,
    0:04:49 Publixy 16, Omnicom 15, and IPG 11.
    0:04:53 This is what happens when there’s essentially
    0:04:56 a tectonic shift away from your sector.
    0:04:58 And that is the first thing that happens is cost cutting.
    0:05:01 The second thing that happens is consolidation.
    0:05:02 So you can bulk up,
    0:05:04 which is effectively a way of cost cutting
    0:05:06 ’cause then you only need one headquarters, one CFO,
    0:05:08 one admin staff.
    0:05:11 The modern kind of ad conglomerate was sort of forged
    0:05:15 by Sir Martin Sorrell and it was the following.
    0:05:17 These are good businesses or at least they used to be,
    0:05:19 the ad agency business or the agency business
    0:05:21 where companies would think, all right, we’re Intel,
    0:05:22 we’re not that creative.
    0:05:24 We get engineers to come work here,
    0:05:27 but we’re not about making commercials or designing logos
    0:05:29 or putting on conferences or buying keywords or what have you.
    0:05:32 So we’re gonna outsource this part of the company
    0:05:34 and we need to find really creative people
    0:05:36 who see all these types of ideas
    0:05:38 and played with the wrong toys or the right toys
    0:05:40 and where those people that decorated their desk
    0:05:42 and funky shit or you went over to their apartment
    0:05:43 and their apartment just seemed cooler than yours
    0:05:45 even though they made less money, those people.
    0:05:47 And we need to outsource it.
    0:05:50 And from 1945 to 1995,
    0:05:52 the algorithm for printing money
    0:05:54 or creating shareholder value was the following,
    0:05:57 mediocre shoes, salty snack or car,
    0:05:58 and then wrap brand codes
    0:06:00 or these amazing brand codes around it
    0:06:02 of masculinity, maternal love,
    0:06:05 European elegance, American macho,
    0:06:07 whatever it might be to be smart, to be practical,
    0:06:08 whatever it was.
    0:06:10 And the thing about brand building
    0:06:11 was it was the ultimate strategy
    0:06:13 because the sword around building a brand
    0:06:15 was so incredibly sharp.
    0:06:16 It was such a valerian steel
    0:06:18 and it was specifically not the creative
    0:06:20 but the fact that you could consolidate the market
    0:06:24 and reach people with these pieces of creative
    0:06:26 that created these intangible associations
    0:06:27 wrapped around a mediocre product.
    0:06:30 You could find 80% of all of America
    0:06:34 in one of three places NBC, ABC or CBS for five hours a day
    0:06:35 so we could build these brands.
    0:06:37 So essentially the ability to find a mediocre product
    0:06:39 and build amazing associations around it
    0:06:44 such that it became not $8 of leather and laces
    0:06:48 but 140 bucks of being like Mike
    0:06:51 or not 20 cents of peanut butter paste
    0:06:53 but $2 or $3 of maternal love
    0:06:55 because choosy moms choose jiff.
    0:06:57 This was the ultimate way to kind of build shareholder value
    0:07:01 and you had General Motors, you had P&G, you had Coca-Cola.
    0:07:04 I think kind of the beginning of the decline of the brand age
    0:07:06 was when Honda introduced a compact car in the US
    0:07:09 and said, all right, it’s not all about branding.
    0:07:11 It’s just about a better car at a better price.
    0:07:15 And then the big, big unlock or kind of the last nail
    0:07:19 or what really took the vampire of kind of ad supported
    0:07:21 or the brand age down or was sort of the wooden stake
    0:07:24 in Don Draper’s heart was the introduction of Google.
    0:07:27 And that is no longer needed to defer
    0:07:28 to the shorthand of a brand.
    0:07:30 And a brand is just diligence, right?
    0:07:31 I used to stay at the Mandarin Oriental
    0:07:32 with four seasons wherever I’d go.
    0:07:34 One, because someone else was paying for it
    0:07:35 and two, they was doing a good job.
    0:07:39 Now I want to use my social graph, Google AI to find out
    0:07:43 that the best gym in Europe or in Berlin is at the warehouse
    0:07:46 or that I want to stay at, you know,
    0:07:48 which lodge do I want to stay at in Africa?
    0:07:50 All of a sudden, I’m no longer deferring
    0:07:51 strictly to the brand, right?
    0:07:54 I can find, I can do my own homework
    0:07:56 and also a big digital unlock, right?
    0:07:57 Tesla doesn’t need to advertise as much
    0:08:00 because if you can tune up your electric car
    0:08:01 over the airwaves, that’s amazing.
    0:08:05 Google, Instagram are in fact 10x better products.
    0:08:08 So digital innovation has kind of made product cool again.
    0:08:11 Brands are now built by supply chain and innovation
    0:08:14 and technology that unlocks some sort of product feature.
    0:08:16 That leaves ad agencies, quite frankly,
    0:08:17 with declining power.
    0:08:19 And the problem is it hasn’t been overnight.
    0:08:21 It’s kind of like the magazine industry.
    0:08:25 The worst thing that can happen to you is to die slowly
    0:08:28 because the thing about marketing and ad spending
    0:08:30 is that it’s incredibly resilient.
    0:08:32 It’s always been about 1.5% of GDP,
    0:08:34 but it also doesn’t grow a lot as a whole.
    0:08:36 Google hasn’t grown the market.
    0:08:39 They’ve just taken tens and now hundreds
    0:08:41 of billions of dollars out of the ecosystem.
    0:08:44 It is a bit of a zero sum game.
    0:08:46 And these guys have been on the wrong end of that.
    0:08:49 Now, the merger we’re talking about here
    0:08:51 is expected to result in $750 million
    0:08:52 in annual cost savings.
    0:08:53 Omnicom CEO, John Wren.
    0:08:56 I met with John Wren literally 25 years ago
    0:08:58 about potentially selling my brand strategy
    0:08:58 for a profit to him.
    0:09:00 Seemed like a very smart guy.
    0:09:01 He’ll lead the new company,
    0:09:04 which will keep the Omnicom name, the combined company,
    0:09:08 Interpublic IPG CEO, Philip Krakowski,
    0:09:11 will serve as the co-chief operating officer, co-officer.
    0:09:13 That means he’s on his way out.
    0:09:16 Omnicom shareholders will own 60.6% of the combined company
    0:09:20 while interpublic shareholders will command 39.4%.
    0:09:23 Interpublic shares were up 11% on the news
    0:09:24 while Omnicom’s fell 6%.
    0:09:26 Typically, the acquiring company who’s on top,
    0:09:29 their shares fall because usually people get excited
    0:09:32 about building a bigger empire and they overpay.
    0:09:34 Only one in three acquisitions works.
    0:09:36 Omnicom has tried to do this before.
    0:09:39 Back in 2013, Omnicom tried a 35-million dollar merger
    0:09:42 with Publixy, but it fell apart due to regulatory issues.
    0:09:45 Still, Omnicom CEO, John Wren remains optimistic
    0:09:47 and has said the current regulatory environment
    0:09:48 is more friendly to business.
    0:09:50 It’s not that they’re more friendly to business, John.
    0:09:53 It’s just they realize what trouble you’re in
    0:09:56 and that you need to bulk up or specifically cut costs.
    0:09:58 The notion that they’re gonna get in the way of this
    0:10:00 or they’re gonna have some sort of monopoly power
    0:10:01 is just insane.
    0:10:02 Now, I wouldn’t put it past the DOJ or FTC
    0:10:05 ’cause in my mind they do make irrational decisions
    0:10:06 every once in a while.
    0:10:08 But for God’s sakes, this isn’t about monopoly power,
    0:10:11 controlling the media ecosystem.
    0:10:15 This is about literally just trying to stay afloat.
    0:10:17 In some, if you can’t beat big tech,
    0:10:19 you need to consolidate and get bigger yourself.
    0:10:22 The deal is expected to close in the second half of 2025.
    0:10:25 The big question is, will this integration actually succeed?
    0:10:27 This is the right thing to do.
    0:10:29 You know, IPG’s on bottom here.
    0:10:33 If you’re at headquarters in admin, in middle management,
    0:10:34 you’re not client facing,
    0:10:38 you’re not ringing the registered IPG, folks,
    0:10:40 let’s be clear, you’re on the green mile.
    0:10:42 And while John Wren will paint a vision of the future
    0:10:43 and how there’ll be a lot of growth
    0:10:45 and they don’t have an immediate layoffs plan,
    0:10:48 okay, stick around to get the severance, but be clear,
    0:10:52 if you’re not directly linked to a client
    0:10:55 or a critical mission critical function,
    0:10:57 and you’re making a good living,
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    0:11:02 We’ll be right back for a conversation with Michael Lewis.
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    0:14:02 – Welcome back.
    0:14:03 Here’s our conversation with Michael Lewis,
    0:14:05 New York Times bestselling author
    0:14:08 and host of the podcast Against the Rules.
    0:14:12 Michael, where does this podcast find you?
    0:14:15 – Smoke Tree Ranch off the side of Palm Springs,
    0:14:19 which is a gated community created by Walt Disney
    0:14:22 and some of his pals way back when.
    0:14:23 – Wow.
    0:14:24 Let’s buzz right into it.
    0:14:26 In the latest season of your podcast Against the Rules,
    0:14:28 you investigate sports betting,
    0:14:29 which we talk a lot about here on the pod,
    0:14:33 which you refer to as a great social experiment.
    0:14:35 Walk us through the state of play of this experience
    0:14:37 and where you think we’re headed.
    0:14:40 – So in 1992, Bill Bradley,
    0:14:43 then a senator, created essentially a federal ban
    0:14:44 on sports betting.
    0:14:46 It exempted Nevada,
    0:14:48 but basically it was against the law.
    0:14:53 And the Supreme Court repealed that in 2018.
    0:14:57 And the new law of the land is states can legalize it
    0:15:00 if they want to and 39 states have.
    0:15:03 And about two thirds of the American population
    0:15:07 has access to sports betting on their phones.
    0:15:08 About one third still doesn’t.
    0:15:12 And the industry here is dominated by two companies,
    0:15:14 FanDuel and DraftKings.
    0:15:16 They have a little hard to say exactly,
    0:15:20 but say roughly 70% of the market.
    0:15:22 And they were before they were sports gambling companies,
    0:15:24 they were daily fantasy sports companies,
    0:15:28 which gave, they actually was the perfect thing to be
    0:15:31 before mobile sports gambling is legalized
    0:15:32 as a daily fantasy sports company.
    0:15:34 You know all the customers,
    0:15:36 you have data on all the customers.
    0:15:40 Sports bets in America have skyrocket.
    0:15:42 It’s a little, again, a little hard to say
    0:15:44 ’cause hard to know what numbers to trust
    0:15:46 because there was an illegal market
    0:15:48 that presumably is not quite as big as it used to be,
    0:15:50 but it’s gone from,
    0:15:52 the legal market has gone from a few billion
    0:15:55 to over a hundred billion a year.
    0:16:00 And there’s just starting to be some academic research
    0:16:04 showing the social effects of this.
    0:16:05 I mean, it’s kind of cool this.
    0:16:08 The way it’s rolled out has created these natural experiments
    0:16:11 that you have because you have states that are side by side.
    0:16:13 One has legalized it, one has not legalized it.
    0:16:18 So you can sort of tease out the effects of legalizing it,
    0:16:21 but bankruptcies are up, savings rates are down.
    0:16:23 If it follows the path that it followed
    0:16:25 in the United Kingdom and Australia,
    0:16:26 suicide rates will be up.
    0:16:29 So there’s some social costs to it all.
    0:16:32 But I think like really early days,
    0:16:34 I mean, you know, it’s only been legal for six years.
    0:16:35 There were companies that really only been up
    0:16:38 and running in most states for just a few years.
    0:16:41 It’s kind of not hard to make some predictions
    0:16:44 about where it’s going, but it’s not there yet.
    0:16:47 – So I’m a glass half empty kind of guy,
    0:16:49 but you cited some stats.
    0:16:52 I’ve seen 20 to 30% increase in bankruptcies
    0:16:54 and states illegalize it.
    0:16:57 I see young men with kind of less structure in their lives
    0:16:58 who are more prone to addiction.
    0:17:02 I think six out of seven gambling addicts are men.
    0:17:04 My understanding is gambling has the highest suicide rate
    0:17:06 because if you’re addicted to meth,
    0:17:08 people figure it out and try and intervene.
    0:17:10 You can get in way over your skis with gambling
    0:17:13 and nobody knows and you decide there’s only one way out.
    0:17:14 I’ll use an academic error.
    0:17:16 I think this is a fucking disaster, your thoughts.
    0:17:18 – Yeah, I’m totally with you.
    0:17:21 This is why I was trucked in the subject.
    0:17:25 I couldn’t believe, well, look, once it’s legalized,
    0:17:28 I’m a little shocked by the insensitivity
    0:17:30 of the social, to the public health crisis
    0:17:35 is gonna trigger because it’s essentially Wild West
    0:17:37 in how you can get to the customer
    0:17:40 and they aren’t, you know, the sports gambling companies,
    0:17:43 they were mistaken for casino companies
    0:17:44 when the people kind of thought,
    0:17:46 “Oh, it’s gonna be like a casino business.”
    0:17:51 So that the kind of big, what the house takes,
    0:17:54 about roughly 5%, it’s always been kind of 5%,
    0:17:56 we remain kind of 5%.
    0:17:58 This number keeps going up with these companies.
    0:18:00 They’re like, it’s like at 15%.
    0:18:04 And effectively what they are doing
    0:18:08 is mining the entire US population
    0:18:11 for people willing to make stupid sports bets.
    0:18:14 And they have a finely honed ability
    0:18:17 to identify anybody who actually knows what they’re doing,
    0:18:18 like the sharp gambler,
    0:18:21 someone who actually might have some edge in a sport
    0:18:24 and toss them out or limit them to the point
    0:18:26 where they’re effectively tossed out.
    0:18:28 So that their business is built on people
    0:18:30 who don’t know what they’re doing.
    0:18:33 And it’s further, in a way that, you know, casinos,
    0:18:34 when you’re in a casino course,
    0:18:37 it’s manipulating you in all kinds of diabolical ways.
    0:18:39 But when the casino’s in your pocket,
    0:18:42 it’s like your whole life is in the casino kind of thing.
    0:18:46 And they have an ability to sort of like nudge people
    0:18:50 in doing stuff that they just wouldn’t think to do.
    0:18:52 It is, and it’s making the dumber and dumber bets.
    0:18:54 When you kind of think about,
    0:18:57 okay, like what’s the disaster going to look like?
    0:18:59 It’s not just men, it’s young men.
    0:19:03 Young men are the real target.
    0:19:06 The Lancet, the British Medical Publication,
    0:19:08 just came out with a study that said,
    0:19:10 I mean, this number is so high
    0:19:13 that I wanted to pause before I say it,
    0:19:17 but the 26% of young men who were exposed to gambling
    0:19:19 developed some sort of gambling problem.
    0:19:23 That seems very high, but even if it’s half that,
    0:19:26 it’s like the NCAA,
    0:19:28 who’s new president, Charlie Baker,
    0:19:30 was just shocked by the gambling activity
    0:19:32 he was seeing on campuses,
    0:19:34 commissioned to study,
    0:19:35 to see how many people were doing this,
    0:19:38 and more than 60% of young men on college campuses
    0:19:39 are sports gambling.
    0:19:40 So you do the math.
    0:19:42 It’s just like, we’re like,
    0:19:45 it’s almost like we’re creating a pool
    0:19:47 of future gambling addicts.
    0:19:49 And you’re right, it’s very interesting.
    0:19:51 You’re right about like,
    0:19:55 when you think about what’s gonna stop this train,
    0:19:58 if you compare it to like opioids,
    0:20:01 like opioids was able to run for 20 years
    0:20:03 before anybody really put a stop to it.
    0:20:06 And 750,000 people die.
    0:20:10 And it was about as visible and epidemic as you can have.
    0:20:12 This, it’s invisible.
    0:20:15 You don’t see what’s happening to people until,
    0:20:18 so you wonder if it takes 20 years for the society
    0:20:21 to get its hands around the opioid industry,
    0:20:22 how long is it gonna take it
    0:20:24 to get its hands around the gambling industry?
    0:20:27 So, yes, I agree with you.
    0:20:29 It’s like, how on earth did we let this happen?
    0:20:31 But it’s of a piece with other things
    0:20:33 that we have let happen.
    0:20:34 – I mean, when I think about it,
    0:20:36 it’s not only, my fear isn’t only about gambling addiction,
    0:20:40 but when you put kind of an on-demand Dopa bag
    0:20:41 in young people’s pockets,
    0:20:44 just as they’re kind of hardwiring their brain
    0:20:47 and learning about life and reward,
    0:20:49 that we’re just setting them up
    0:20:52 to be just fucking Dopa monsters.
    0:20:54 And if they can’t get it from gambling
    0:20:55 ’cause they run out of money,
    0:20:57 they’re gonna find it somewhere else.
    0:20:59 Have you seen any of my thesis
    0:21:01 is we are literally unleashing into the economy,
    0:21:06 into the world, millions of Dopa monsters
    0:21:10 that will are just gonna find whatever way they can,
    0:21:14 opiates, sex, porn, online shopping.
    0:21:17 They’re just gonna be so hungry for that rush
    0:21:20 because their brains will have been wired
    0:21:21 to expect that rush.
    0:21:24 So it’s gonna have all sorts of ramifications
    0:21:25 outside of gambling.
    0:21:27 Am I catastrophizing here?
    0:21:30 I mean, it doesn’t sound unreasonable to me.
    0:21:34 My first thought when you started down that little path
    0:21:38 was it’s interesting that sports used to be a place
    0:21:40 where you learned the slow rewards
    0:21:43 that come from hard– – The lay gratification, yeah.
    0:21:45 – Yeah, you learned the opposite thing.
    0:21:47 And that we’re turning that this mechanism
    0:21:50 that used to take young men
    0:21:53 and teach them a certain lesson.
    0:21:56 Are you taking it to teach a different lesson?
    0:21:58 So it was disturbing enough to me
    0:22:02 that my youngest is a 17 year old son.
    0:22:04 Like I gave him some money and adult supervision
    0:22:08 so he could learn how to navigate this world
    0:22:13 because it does feel like not only are we creating a world
    0:22:16 of, you know, dopamine addicts,
    0:22:20 but the signal you send especially to young men
    0:22:22 ’cause they’re so susceptible to this
    0:22:24 is the world actually doesn’t give a shit about you.
    0:22:27 That it’s out to get you.
    0:22:30 When I got into this, when I started working on the story,
    0:22:34 what motivated me was the book I wrote about,
    0:22:38 stuff I’d learned on the book I’d written about the pandemic.
    0:22:40 I got interested in it because the US response
    0:22:41 in the beginning was just so appalling.
    0:22:44 We had like 20% of the world’s deaths
    0:22:47 with 4% of the world’s population in the first six months.
    0:22:51 And I learned in the process that this was,
    0:22:54 that in the few years leading up to the pandemic,
    0:22:58 we’d had experienced a decline of life expectancy
    0:22:59 in three straight years.
    0:23:01 And that had not happened since 1918.
    0:23:03 And I thought, well, the pandemic’s happening
    0:23:04 in the context of a society
    0:23:07 that’s already not taking care of its people.
    0:23:10 That some basic failure is occurring.
    0:23:13 And this feels like part of that.
    0:23:16 That it’s like, it’s a public health problem.
    0:23:19 And that it’s not that hard,
    0:23:23 even if you can’t do anything about legalizing sports gambling,
    0:23:27 it’s not that hard to do some things to blunt its effects.
    0:23:28 So here’s my solution.
    0:23:31 I’m trying to work within the constraints of the society.
    0:23:34 I don’t think actually me going off about
    0:23:38 how diabolical it all is, is gonna help anything.
    0:23:41 They’re doing something that I think is kind of interesting,
    0:23:44 the company, the sports gambling companies.
    0:23:46 They are, ’cause they’re so good
    0:23:48 at chucking out of their businesses
    0:23:50 anybody who knows what they’re doing.
    0:23:53 They’re isolating people who don’t know what they’re doing.
    0:23:58 So by definition, if you have an account in good standing
    0:23:59 at FanDuel and DraftKings
    0:24:01 and you’re doing a lot of sports betting,
    0:24:02 you have signals of the world,
    0:24:04 you don’t know what you’re doing.
    0:24:07 I think that if we get that message out
    0:24:09 and that if you say like,
    0:24:11 if you’re looking for someone to manage your money,
    0:24:12 the first question you should ask them is,
    0:24:14 do they have account in good standing at FanDuel and DraftKings?
    0:24:17 If they do, you should never give them your money to manage.
    0:24:22 Like that if you make it a point of shame
    0:24:25 that you’re in good with the industry,
    0:24:28 that you might stigmatize it in a way
    0:24:30 that makes it less dangerous.
    0:24:32 We’ll be right back.
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    0:27:46 (upbeat music)
    0:27:51 – Your book Going Infant,
    0:27:53 you fell under some of what I call the same
    0:27:56 texture of criticism as Walter Isaacson’s biography
    0:27:57 on Elon Musk and that of us.
    0:28:00 You were kind of seen loosely as having a front row seat,
    0:28:02 but not seeing what was going on.
    0:28:04 – Do you think that’s a fair criticism?
    0:28:07 – I didn’t write it until after it all collapsed.
    0:28:09 When I sat down to write the first words,
    0:28:13 there wasn’t much I didn’t know had happened.
    0:28:14 I mean, very little happened, came out in the trial
    0:28:17 that wasn’t already kind of known.
    0:28:22 But it is true that I was there a fly on the wall
    0:28:28 from kind of end of 2021 through the collapse of in November
    0:28:32 of 2022.
    0:28:35 And if you had said he has the money,
    0:28:37 the customer’s money in Alameda,
    0:28:39 I would have said you’re insane.
    0:28:42 There’s no way that would be so dumb.
    0:28:45 So I did poke everybody did this.
    0:28:48 Everybody who saw the structure of the business,
    0:28:50 he’s got his own private hedge fund on the side,
    0:28:54 our trading firm on the side of it in exchange.
    0:28:56 And he owns them both.
    0:29:00 I did ask lots of questions about conflicts of interest,
    0:29:01 but what I imagined would be the problem
    0:29:03 wasn’t the problem.
    0:29:05 I imagine the problem was that his trading firm
    0:29:09 would have the same sort of privileged access
    0:29:12 to the exchange that high frequency traders get
    0:29:13 on the New York Stock Exchange
    0:29:16 and privileged access to data and so on.
    0:29:18 So front running, whatever.
    0:29:20 And that wasn’t the case.
    0:29:22 I did not see that like,
    0:29:25 oh, yeah, the money’s in the wrong place.
    0:29:26 So that’s true.
    0:29:31 Did I, in retrospect, think I should have seen it?
    0:29:33 Not really, no one else saw it either.
    0:29:36 You know, there wasn’t the interesting thing.
    0:29:38 There are many interesting things about the story,
    0:29:42 but one interesting thing is, yeah, a lot of people said,
    0:29:44 I wonder if they’re shady like FTX,
    0:29:47 but that’s the in crypto, that’s easy.
    0:29:51 Like as a heuristic, if you’re a successful crypto business,
    0:29:53 you’re, you know, you’re largely unregulated
    0:29:55 and you’re 26 years old
    0:29:57 and no one’s paying that much attention.
    0:30:00 The specific criticism,
    0:30:03 oh, he’s got the customer’s money in his hedge fund.
    0:30:06 No one said, zero people said.
    0:30:08 So not even any ad, whatever,
    0:30:12 a hundred and something professional investors
    0:30:14 who owned a piece of them and they didn’t say it.
    0:30:15 So I don’t know.
    0:30:16 I don’t know.
    0:30:17 That would have been very hard.
    0:30:20 I don’t know how you would have detected that.
    0:30:21 – Well, I have a couple of follow up questions there.
    0:30:23 So when I’m sort of, follow the story a little bit
    0:30:27 from an adjacent, I actually bought claims against it.
    0:30:28 – I know this.
    0:30:29 You bought the claims.
    0:30:31 – And if I could have, I would have.
    0:30:32 – Oh really?
    0:30:34 – Oh my God.
    0:30:35 I mean, it just seemed pretty obvious
    0:30:37 that they weren’t worth 10 cents on the dollar.
    0:30:38 – Well, I wasn’t that smart.
    0:30:40 I bought them for 23 cents,
    0:30:42 but because it’s better to be lucky than good
    0:30:43 because of the surge in crypto.
    0:30:45 They’re now probably your,
    0:30:47 the payouts can be somewhere between 120 cents
    0:30:48 on the dollar, 150 cents.
    0:30:51 And other than, other than patting myself on the back
    0:30:53 for one of the few good investment decisions
    0:30:54 I’ve made in the last year,
    0:30:56 if everyone gets their money back.
    0:30:57 Now granted, he committed fraud.
    0:31:00 He, he took customer accounts from people
    0:31:02 who thought they were investing, you know,
    0:31:04 putting their money in a deposit, not even investing.
    0:31:06 And then he used it to take risks
    0:31:08 they had not signed up for.
    0:31:10 So that’s illegal.
    0:31:13 But one, given that everyone’s given their money back, given,
    0:31:15 I don’t understand the difference between
    0:31:16 what Sam Bankman Freed did
    0:31:18 and what John Corzine did at MF Global,
    0:31:19 I think it was called.
    0:31:20 (laughing)
    0:31:23 – You’re taxing my memory there, but yeah.
    0:31:24 – You remember that?
    0:31:25 – Yeah, yeah, do remember.
    0:31:25 – Did the same thing.
    0:31:26 – Can I back you up a sec?
    0:31:27 I really wanted to ask you about this.
    0:31:32 I was, I took a keen interest in the market
    0:31:38 in claims on FTX because it seemed really clear to me
    0:31:41 that what the bankruptcy people were saying are signaling
    0:31:44 that it’s like, it’s this dumpster fire
    0:31:45 and there’s nothing there.
    0:31:48 And boy, just be incinerated all this money.
    0:31:50 That that wasn’t true.
    0:31:53 And it was amazing to me how cheaply these things
    0:31:54 traded at first.
    0:31:59 How did you even think to buy claims?
    0:32:02 – I’m fascinated by,
    0:32:04 I’ve invested across every asset class,
    0:32:06 from angel to venture to growth to public,
    0:32:09 and by far the best asset class is distressed,
    0:32:10 because similar to biology,
    0:32:12 people don’t want to hang around old people.
    0:32:14 So the best businesses are businesses
    0:32:15 dealing with old people.
    0:32:18 And the best asset class is distressed.
    0:32:19 So I look at bankruptcy filings.
    0:32:20 And I was fascinated by this.
    0:32:22 I got the bankruptcy filing from the court.
    0:32:23 I read through it.
    0:32:27 And in the bankruptcy claim, it listed all their assets,
    0:32:29 cash, some Bitcoin, et cetera.
    0:32:31 And one of the assets that just popped out to me
    0:32:35 is they had invested $500 million in Anthropic.
    0:32:38 Anthropic is the number two AI company, LLM.
    0:32:40 And I couldn’t find for the life of me
    0:32:43 what the valuation was that they invested at,
    0:32:45 but I figured it was somewhere between three and five billion.
    0:32:48 So I took the most conservative which meant,
    0:32:50 number which meant that one of the things
    0:32:53 that FTX, the bankruptcy FTX had
    0:32:56 that would ultimately be distributed to the claimants
    0:33:00 was 10% I assumed of Anthropic.
    0:33:05 I valued Anthropic at approximately 40 billion.
    0:33:08 So I thought the stake is worth four billion.
    0:33:10 Claimants, total claimants nine billion.
    0:33:12 So just the stake in Anthropic,
    0:33:15 I valued at 44 cents on the dollar.
    0:33:17 Claims were selling for 22 cents.
    0:33:20 To me, this was the easiest trade I’ve ever met.
    0:33:24 And why do you think other people didn’t make that trade?
    0:33:25 – Occasionally you find something,
    0:33:27 I don’t know, this doesn’t happen to be very long.
    0:33:29 I’m like, oh my God, they’ve missed it.
    0:33:32 And that is people didn’t see the $500 million number.
    0:33:33 They could see the $500 million.
    0:33:37 What they couldn’t see was the numerator or the denominator.
    0:33:40 And that was the valuation they invested at.
    0:33:43 And I thought, there’s no way they don’t own
    0:33:45 at least 10% of this thing.
    0:33:47 And then you have to value another unknown.
    0:33:49 And that is, what is that 10% now?
    0:33:52 But I thought it’s worth probably 40 cents,
    0:33:53 a minimum of 23 cents.
    0:33:56 So all the crypto, all the cash,
    0:33:59 everything else was just gonna be gravy.
    0:34:01 – To my bewilderment, people weren’t paying attention.
    0:34:03 And there was, I mean, what he did,
    0:34:05 he didn’t take whatever it was,
    0:34:07 $11 billion of customer assets
    0:34:11 and spend it on blow and hookers and private jets.
    0:34:16 He put five billion of it into venture capital investments.
    0:34:17 And this was just one of them.
    0:34:19 And yet there was this pile of stuff.
    0:34:23 And I keep waiting for some to come and ask the question,
    0:34:27 how good of VC was Sam Bankman Freed?
    0:34:30 He was doing it, like how well did he perform
    0:34:32 compared to his peer group?
    0:34:35 Because it wasn’t, he has a piece of,
    0:34:36 you may not even know this.
    0:34:38 He has a piece of SpaceX in there.
    0:34:39 He has it through Michael Keevis.
    0:34:40 But so you don’t see it.
    0:34:44 But he’s got pieces of some really valuable stuff.
    0:34:47 Even if crypto goes to zero
    0:34:51 and nevermind all the crypto businesses he bought.
    0:34:53 So one last question on this,
    0:34:57 ’cause I’m curious ’cause I haven’t,
    0:34:58 ’cause I knew you made this trade.
    0:35:00 Someone told me about you being in the market
    0:35:03 and I thought, well, that’s kind of cool.
    0:35:07 Did you worry at all that the bankruptcy process itself
    0:35:10 was gonna incinerate your profits?
    0:35:13 That it would be so expensive
    0:35:15 that you wouldn’t end up seeing,
    0:35:16 you should have seen the money,
    0:35:18 but in the end it would go in the pockets
    0:35:20 of Solomon Cromwell lawyers.
    0:35:21 – That’s a great question.
    0:35:23 But part of the analysis I did
    0:35:24 when I put together the spreadsheet was
    0:35:26 it’s the same administrator that handled Amron
    0:35:30 and I estimated the cost at about a billion dollars.
    0:35:33 And I thought, okay, if just the anthropic stake
    0:35:36 is worth four billion, the coins are worth three.
    0:35:38 I saw 70 cents on the dollar
    0:35:42 and then take out a billion, so 60 cents on the dollar.
    0:35:44 And then what it ends up, it looks like the payout.
    0:35:45 And a lot of the stakes we’re talking about
    0:35:47 have already been sold, but it looks to me
    0:35:50 what they’re saying, the court administrator’s saying
    0:35:51 that they now think they’re gonna get somewhere
    0:35:54 between 120 and 160 cents on the dollar.
    0:35:57 A lot of that because crypto has surged.
    0:36:00 But the lesson I take away from all of this,
    0:36:02 and this is a larger lesson about investing in life,
    0:36:04 is the greatest return on invested capital
    0:36:07 is inversely correlated to how sexy something is.
    0:36:10 This isn’t true of sports, which you know better than me
    0:36:11 because there’s no shortage of billionaires
    0:36:14 of midlife crises and it’s a regulated monopoly
    0:36:15 to control supply.
    0:36:17 But generally speaking, outside of sports,
    0:36:20 the best asset classes are the least sexy.
    0:36:23 And this was a really unsexy investment.
    0:36:26 Everybody thought this thing, it had fraud,
    0:36:28 it had crypto, which was out of vogue.
    0:36:29 This thing was supposedly going to zero.
    0:36:34 And any reasonable diligence said, no, this is all upside.
    0:36:36 – We did, I didn’t really answer your question
    0:36:38 about what was different from between
    0:36:40 what he did and what John Corazon did.
    0:36:44 And you’ve taxed my memory about what John Corazon did.
    0:36:45 But I do think, what do I think?
    0:36:49 I think that there’s a kind of misapprehension
    0:36:54 in the general tenor of the response to Sam Bankman Freed,
    0:36:59 that people still talk about it as if what he did
    0:37:04 was intentionally set up a business to steal customer money,
    0:37:05 stole the customer money
    0:37:07 and the customers don’t have any money now.
    0:37:11 And what he actually did was set up a business that was,
    0:37:14 I mean, it was jankily set up in the first place,
    0:37:18 but it was clearly not start, didn’t start as a fraud,
    0:37:21 was in and of itself a successful business
    0:37:23 if he’d just not done the idiot things
    0:37:25 he’d done with his hedge fund.
    0:37:30 And then got himself in a pickle in June of 2022,
    0:37:34 when crypto lenders asked for the $10 billion,
    0:37:35 they’d lend him back.
    0:37:37 And instead of just telling them, I don’t have it,
    0:37:39 I put it in VC investments,
    0:37:41 use the customer money to fill the hole.
    0:37:44 And that was a really stupid thing to do.
    0:37:49 It is fraud, but it’s different than like evil person
    0:37:51 sets out to do evil.
    0:37:53 So how I feel about it, I feel sad about it mainly.
    0:37:57 And I think that what is like the vice,
    0:37:59 the character flaw, if you will,
    0:38:03 or the pattern, it’s more of the pattern in his character
    0:38:05 that leads to this behavior,
    0:38:09 that was visible in every other aspect of his life.
    0:38:13 And it was a pattern of foisting risk
    0:38:15 upon other people without their permission.
    0:38:17 And he did it over and over.
    0:38:18 He did it in his romantic life.
    0:38:20 He did it in his friendships.
    0:38:23 And he comes by this vice, honestly,
    0:38:25 I think he himself is sort of numb to risk
    0:38:27 and kind of thinks he’s right all the time anyway.
    0:38:31 So he didn’t actually probably completely grok
    0:38:34 the risk that he was foisting on others.
    0:38:36 I thought this is all gonna work out.
    0:38:39 That was stupid and a crime,
    0:38:42 but I can understand how he got there.
    0:38:46 And I do have a problem with 25 years in jail.
    0:38:49 I think like, okay, jail, that makes some sense.
    0:38:53 But like, I don’t know how you even measure these things,
    0:38:55 but it’s like–
    0:38:58 – 25 years for a guy like that is almost a death sentence.
    0:38:59 – Yeah, so I just don’t,
    0:39:02 I think that’s excessive and I don’t get it,
    0:39:04 but people will argue with me.
    0:39:06 – But I wanna put forward a thesis
    0:39:07 ’cause you’re a storyteller
    0:39:10 and just love the way you think through stuff.
    0:39:13 I would argue, and I want you to respond to the thesis,
    0:39:15 that the difference between playing golf at Centennial
    0:39:17 and going to Wimbledon, which I imagine I would be doing
    0:39:19 if I were John Corazon right now,
    0:39:23 I don’t see a lot of difference in the criminal behavior here.
    0:39:26 The difference is brand management.
    0:39:28 And that is, what you have with Sam Bankman Freed
    0:39:31 is a guy who had this kind of floppy,
    0:39:33 guy just rolled out a bad crypto thing.
    0:39:36 He purposely set up this organization, The Bahamas,
    0:39:38 which felt sketchy.
    0:39:42 He was sleeping with and doing drugs with his coworkers.
    0:39:46 He decided to go on the most ridiculously ill-advised
    0:39:49 apology tour, which entirely backfired,
    0:39:52 whereas Corazon listened to very smart people
    0:39:54 who said, “Shut the fuck up.
    0:39:57 “Nobody speaks to anybody but your lawyers.
    0:40:00 “Go quiet, act like the victim.
    0:40:01 “You didn’t know what was going on.
    0:40:02 “Act contrite.
    0:40:04 “You were terrible fiduciary.
    0:40:05 “You had no idea.”
    0:40:09 As opposed to going and speaking to Andrew Ross Sorkin
    0:40:14 in cargo shorts, the difference between Corazon,
    0:40:17 again, going to Wimbledon and Bankman Freed
    0:40:19 with a live sentence, is poor communications
    0:40:22 and brand strategy, your thoughts.
    0:40:26 – Well, you’re absolutely right that the way he handled it
    0:40:29 from the minute it all fell apart was catastrophic.
    0:40:34 You gotta remind me what John Corazon actually did,
    0:40:36 ’cause I don’t remember.
    0:40:39 – MF Global, customer deposits that ends up
    0:40:41 were being used to make speculative investments
    0:40:42 in the market.
    0:40:44 John Corazon, my understanding is,
    0:40:47 side interest rates were gonna head one way,
    0:40:49 and he claims he didn’t know these deposits
    0:40:50 were being commingled.
    0:40:52 It was pretty much the exact same crime.
    0:40:55 And Corazon got banned from the industry
    0:40:57 or paid a fee.
    0:40:59 MF Global, I think, went away,
    0:41:01 but these things, you know, tomato, tomato,
    0:41:04 as far as I can tell, and one guy’s got a live sentence,
    0:41:05 and the others are Wimbledon.
    0:41:07 I don’t even know if he watches tennis,
    0:41:10 but to me, it speaks to the notion of public perception.
    0:41:15 – It also speaks to the moment that there’s a frustration
    0:41:18 with the ability to get our hands around the necks
    0:41:20 of rich people who do bad things.
    0:41:22 And when you get a live one now,
    0:41:27 the sort of the speed with which the justice system
    0:41:30 leaps into action is incredible.
    0:41:33 Sam was really easy to prosecute.
    0:41:34 You know, he was just like–
    0:41:36 – You gave him everything.
    0:41:36 – He gave him everything.
    0:41:38 So this is, so think about this.
    0:41:40 I always stopped myself just short of thinking
    0:41:44 he has a death wish because his behavior
    0:41:46 kind of suggests it.
    0:41:49 And he, even when things were good,
    0:41:53 he was always extremely vulnerable,
    0:41:56 like no bodyguards, no, you know,
    0:41:58 you could sneak into his office any hour of the day.
    0:42:00 You could, he really was,
    0:42:04 he has a sense that like he doesn’t protect himself
    0:42:06 almost willfully.
    0:42:08 And so that just extended into what happened
    0:42:10 in the legal process.
    0:42:12 – So Michael, I love this.
    0:42:15 And your fascinating story told us a couple of questions
    0:42:16 to wrap up here.
    0:42:18 I find one of the most fascinating characters
    0:42:21 in all of this was, is it Carolyn Ellison?
    0:42:22 Caroline Ellison?
    0:42:23 – Carolyn Ellison.
    0:42:25 – Any inside, a lot of people didn’t think,
    0:42:27 she ended up being what I might describe her.
    0:42:29 I think the Southern District called her
    0:42:32 the ultimate perfect example,
    0:42:34 quintessential government witness,
    0:42:35 but they put her in prison.
    0:42:37 We know a little bit about Sam.
    0:42:38 We know almost nothing about her.
    0:42:40 What were your impressions?
    0:42:43 Or what was, can you provide us some texture on Ellison?
    0:42:47 – She was a math kid who thought of herself.
    0:42:48 I think she’s kind of,
    0:42:49 there was a bit of a split personality thing
    0:42:51 going on with her.
    0:42:55 She had a lust for a stable and normal life.
    0:42:56 And at the same time thought of herself
    0:42:59 as someone who would do radical and crazy things.
    0:43:04 And was, she in college joined the Effective Altruist Movement
    0:43:07 and seemed to be kind of all in on that.
    0:43:11 And I tell you, she was very susceptible
    0:43:13 to the charms of Sam Bankman Freed.
    0:43:15 Here’s the texture for you.
    0:43:17 She told a colleague, this didn’t even make the book,
    0:43:22 but she told a colleague that even after
    0:43:25 she and Sam had broke off their relationship,
    0:43:27 it was worth her having sex with Sam
    0:43:30 because it made Sam more efficient.
    0:43:32 And making Sam more efficient was the best thing
    0:43:34 she could do for mankind.
    0:43:36 Because Sam was the person who most likely
    0:43:37 to save humanity.
    0:43:41 So that gives you an idea of how she is.
    0:43:43 – I’m gonna try that on a bar.
    0:43:44 Just this, you know this too.
    0:43:48 The world will be a better place if I’m more relaxed tonight.
    0:43:52 So this will be the last question, I promise.
    0:43:57 You have, I look at, I mean, granted, you know,
    0:43:58 my idols are different to most people’s,
    0:44:01 but I look at you and I think, I wanna be this guy.
    0:44:03 You’re just doing cool shit, telling great stories,
    0:44:06 writing interesting books, going to movie premieres.
    0:44:08 I think you make an exceptional living.
    0:44:11 But by all, at least from an exterior perspective,
    0:44:13 you’re in a great seat.
    0:44:16 We have a lot of young men and women who listen to this podcast.
    0:44:19 Can you give us any one or two pieces of advice
    0:44:21 for someone who looks at you and thinks, you know,
    0:44:23 I’d like to be in that seat.
    0:44:26 Were there any things that you wish you’d done more of
    0:44:29 or less of, what advice would you have to your younger self?
    0:44:32 – Well, first off, I never thought that way
    0:44:34 about what seat I wanted to be in.
    0:44:36 I never thought I wanna be that person.
    0:44:38 I always just wanted to be me.
    0:44:40 It’s like the best me.
    0:44:45 And there were things that made me feel the best me.
    0:44:48 And writing was one of them.
    0:44:49 Writing was the big one.
    0:44:51 And I just thought, I’ve gotta do this.
    0:44:54 So not trying to be someone else
    0:44:57 would be one of the first things I would say.
    0:45:01 Another thing that led me to like lots of the good things
    0:45:04 that have happened in my life, it’s related.
    0:45:07 It’s like not paying attention to what you’re supposed
    0:45:08 to be paying attention to.
    0:45:11 Like what everybody else is paying attention to.
    0:45:13 If everybody else is paying attention to it,
    0:45:15 it doesn’t need your attention kind of thing.
    0:45:18 What needs your attention is the thing that you’re interested
    0:45:20 in that no one’s paying attention to.
    0:45:22 And no one encourages you to pay attention to.
    0:45:24 Like your FTX investment.
    0:45:27 It’s like, oh, there’s something here
    0:45:29 and I really care about it.
    0:45:32 And if you can find that and nobody else is there,
    0:45:34 that seems like a lonely place,
    0:45:36 but it’s the golden place.
    0:45:39 And you gotta like lean into that rather than lean out of it.
    0:45:42 Like learn to recognize that moment where God,
    0:45:44 I love doing this thing.
    0:45:46 No one is saying I should be doing this thing.
    0:45:49 No one else is doing this thing.
    0:45:49 But I love it.
    0:45:51 Go with it.
    0:45:52 Go with that feeling.
    0:45:53 It’s great for an investor.
    0:45:55 It’s great for a writer.
    0:45:57 But I think it’s great beyond that.
    0:45:59 It’s sort of like you’re arbitraging
    0:46:01 your personality against the world.
    0:46:05 That you are finding where you are special
    0:46:07 in the level of interest you have in something.
    0:46:10 And that’s when I find my subject matters
    0:46:11 are the most exciting to me.
    0:46:13 When nobody, the thing that troubled me most
    0:46:15 about Sam Beckman Friede as a subject
    0:46:17 is I was genuinely interested in him
    0:46:18 right from the moment I met him,
    0:46:21 but it worried me that so many other people were.
    0:46:23 And the only thing that kept me going
    0:46:26 was that I had this privileged view of it.
    0:46:28 But what I really like with the subject
    0:46:29 is like the Oakland A’s,
    0:46:31 where nobody gives a shit about them,
    0:46:33 but I see there’s something great there.
    0:46:37 And that’s the stuff.
    0:46:39 It’s like, that’s when you know you’re in the right place.
    0:46:41 It’s like, you’re there for some genuine reasons
    0:46:44 ’cause there’s no in genuine reasons to be there.
    0:46:45 – Arbitraging your personality
    0:46:47 against the rest of the world, I love that.
    0:46:51 Michael Lewis is the host of the podcast Against the Rules.
    0:46:53 He’s also a New York Times bestselling author
    0:46:56 of several books, including The Fifth Risk, Flash Boys,
    0:46:57 and The Big Short.
    0:47:00 In addition, some of these have been made into great movies,
    0:47:03 The Big Short, Money Ball, and The Blind Side,
    0:47:05 all nominated for Academy Awards,
    0:47:07 grew up in New Orleans and remains deeply interested
    0:47:08 and evolved in the city,
    0:47:10 but now lives in Berkeley, California,
    0:47:12 Alma Mater, Go Bears,
    0:47:15 with his wife, Tabitha Soren, and their children.
    0:47:17 If I could give my kids any skill, Michael,
    0:47:18 it would be your skill.
    0:47:21 And that is, you are a fantastic storyteller.
    0:47:22 Really appreciate your time.
    0:47:24 – Thanks for having me, Scott.
    0:47:37 – I’ll derivative happiness, say yes.
    0:47:39 I went shooting this weekend.
    0:47:41 And when I say shooting, I mean,
    0:47:42 out to the British countryside,
    0:47:45 where you dress up in this kind of guy-richie-like gear,
    0:47:48 stayed in an old kind of interesting castle.
    0:47:51 And then in the morning, a bunch of Brits took us out
    0:47:53 and seemed like a lot of ’em and a lot of dogs
    0:47:55 and we murdered birds.
    0:47:57 This is not something I’m into.
    0:47:58 Let me be clear.
    0:48:00 When someone described this to me,
    0:48:03 it sounded like Chinese water torture.
    0:48:04 But here’s the thing.
    0:48:06 I have some friends in my life that I really like
    0:48:08 and are wonderful, interesting people,
    0:48:10 and they love it, and they love it.
    0:48:12 And you could just tell they wanted to share the experience.
    0:48:14 So I said yes.
    0:48:16 And when I had to get up at ODAR 100 hours
    0:48:18 to put on wellies or whatever they’re called
    0:48:20 and then figure out a way to go like fire a rifle,
    0:48:22 which I have no desire to do, and animals.
    0:48:26 Anyways, my point is that these experiences
    0:48:27 really bond you to people.
    0:48:28 I know these are good friends,
    0:48:30 but we feel even closer to them now
    0:48:32 because we got to share in something
    0:48:34 that they’re really passionate about.
    0:48:38 On the flip side of that, it’s something I didn’t do,
    0:48:39 something I was bad at.
    0:48:41 I really never developed any hobbies in my 30s and 40s.
    0:48:44 I like movies, I like drinking, I like travel.
    0:48:45 That’s pretty easy to say.
    0:48:49 But I never really developed a passion for anything.
    0:48:50 And the thing about being around people
    0:48:51 that are passionate about something,
    0:48:54 even if it’s kind of Old World Britain and these shoots,
    0:48:56 it’s intoxicating.
    0:48:59 Just sharing it with them and seeing how into it they were,
    0:49:02 the majesty, the detail, the clothes,
    0:49:05 the technology, the history.
    0:49:08 Say yes, and if you find something you like,
    0:49:09 then love it and lean into it.
    0:49:11 ‘Cause at some point, you’re gonna get the chance
    0:49:13 to share it with people who have no interest in it,
    0:49:15 but they’ll be interested in it
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    0:49:20 (upbeat music)
    0:49:22 This episode was produced by Jennifer Sanchez
    0:49:23 and Caroline Shagren.
    0:49:25 Jew Burroughs is our technical director.
    0:49:26 Thank you for listening to the Prop G Pod
    0:49:28 from the Box Media Podcast Network.
    0:49:31 We will catch you on Saturday for No Mercy, No Malice,
    0:49:33 as read by George Hahn.
    0:49:35 And please follow our Prop G Markets Pod
    0:49:37 wherever you get your pods for new episodes
    0:49:39 coming Monday and Thursday.
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    Michael Lewis, a New York Times bestselling author and the host of the podcast Against the Rules, joins Scott to discuss the state of sports betting, the challenges young men face, and the controversy surrounding his book, Going Infinite, which explores the rise and fall of Sam Bankman Fried.

    Scott opens with his thoughts on the Omnicom-Interpublic merger.

    Algebra of happiness: say yes.

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  • The Future of Podcasting, Scott’s Investing Advice, and Choosing Between Career and Family

    AI transcript
    0:00:03 Support for Prop 3 comes from Viori.
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    0:00:40 Exclusions apply, visit the website for full terms and conditions.
    0:00:46 Support for this show comes from Seven Rooms.
    0:00:50 For the restaurant operators out there who want to create more regulars on the regular,
    0:00:52 check out Seven Rooms.
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    0:01:00 that helps you make more money and more magic for your guests.
    0:01:03 It gives your staff the tools to deliver service
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    0:01:10 to targeted text and email marketing.
    0:01:15 Seven Rooms helps you grow your brand and your covers and not your workload.
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    0:01:21 Seven Rooms. Make magic. Make money.
    0:01:24 Support for this show comes from HubSpot.
    0:01:26 How do you begin to describe your job as a marketer?
    0:01:29 You have to generate leads, create content, and gather data.
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    0:01:59 Welcome to The Proficy Pod’s Office Hours.
    0:02:01 This is the part of the show where we answer questions
    0:02:04 about business, big tech, entrepreneurship, and whatever else is on your mind.
    0:02:06 If you’d like to submit a question, please email a voice recording
    0:02:08 to officehours@proficymedia.com.
    0:02:12 Again, that’s officehours@proficymedia.com.
    0:02:14 So with that, first question. I have not seen these questions.
    0:02:17 Hey Scott, Jesse from Pennsylvania here.
    0:02:20 A longtime listener, and I love all that you and the team do.
    0:02:24 I’m a young-ish geology professor at a large, well-known state university,
    0:02:27 so your thoughts on higher education really resonate with me.
    0:02:30 I have two questions related to the future of podcasts.
    0:02:34 I help run a niche podcast that has a small but vibrant listener base.
    0:02:36 We have not monetized our podcast yet,
    0:02:39 but are in a position where we probably could generate a little bit of money from it.
    0:02:44 So far, it remains an outreach and educational project that we do ourselves.
    0:02:48 We’ve tried a bunch of little tests, including making our own audio textbooks
    0:02:52 on our standalone app with some success, but nothing to get too excited about.
    0:02:54 You have painted a really bright future for podcasts,
    0:02:55 especially in the recent months.
    0:02:58 So my first question is, how do you think this inflow of money will come in?
    0:03:00 Will it be a winner-take-all situation,
    0:03:03 or more of a rising tide-floats-all podcast situation?
    0:03:08 Second, what would be your advice to people who run smaller podcasts focused on niche topics?
    0:03:10 How do we position ourselves to not miss the boat?
    0:03:14 For reference, we have about 10,000 subscribers across all channels,
    0:03:17 and our episodes each get several thousand listens in the first few weeks.
    0:03:20 We’d love to hear your thoughts and keep up the great work.
    0:03:23 Thanks for the thoughtful question, Jesse.
    0:03:26 And you have kind of what is probably the core confidence of podcasting,
    0:03:28 as you have a very handsome voice.
    0:03:30 Okay, podcasting.
    0:03:34 So once an industry is digitized, when everyone has access to everything seamlessly,
    0:03:39 quality not only wins, it soaks up all of the cookie.
    0:03:43 And that is, you digitize retail and 50% ends up with one e-commerce company, Amazon.
    0:03:47 You digitize information and you get 93% share to search.
    0:03:49 You digitize photo sharing, whatever it might be.
    0:03:53 And you have one company with two-thirds market share of all social and that’s Meta.
    0:03:56 The same thing has happened in podcasting, and that is,
    0:03:59 everyone has access to everything on Spotify or on Apple Music.
    0:04:04 And as a result, this medium is growing like crazy.
    0:04:10 According to podcast industry insights, there are 450,000 active shows releasing episodes regularly,
    0:04:15 but the top 25 podcasts alone reach nearly half of US weekly listeners.
    0:04:21 Think about this, 50% share of the 25 top podcasts in a pool of 450,000.
    0:04:23 Jesus, talk about inequality.
    0:04:26 If you break into the, you know, if you get into the NBA, it’s a great living.
    0:04:30 But unfortunately, about 99.9% don’t.
    0:04:31 It is very difficult.
    0:04:33 I started seven years ago.
    0:04:36 Pivot does about seven or eight million a year.
    0:04:37 It’ll do 10 this year.
    0:04:38 By the way, I talk about money.
    0:04:42 I think it’s an attempt to keep poor people down when people are making a lot of money,
    0:04:42 you know, talk about money.
    0:04:43 I want people to understand business.
    0:04:46 I want them to understand exactly what’s going on.
    0:04:48 Prop G does less.
    0:04:50 Prop G does around five or six million, but it’s growing faster.
    0:04:51 It’s growing 40% a year.
    0:04:53 Those are not big businesses.
    0:04:57 Raging moderates will probably do, I don’t know, we’ll see.
    0:05:00 It’ll probably do one to two million next year as we get going, get our feet under us.
    0:05:05 These are small businesses, except they’re ridiculously fucking profitable
    0:05:06 once you get to a certain point.
    0:05:11 This podcast has a producer and associate producer, a tech person and a sound engineer.
    0:05:13 And we have some analysts supporting some of the data.
    0:05:17 But okay, what are those costs, right?
    0:05:18 Half a million to a million bucks a year.
    0:05:22 If you have really talented young people who you overpay, see above, profiting media.
    0:05:26 But this is, you know, once you get to a half a million or a million in revenue,
    0:05:27 it’s all gross margin.
    0:05:28 It’s all profit.
    0:05:31 So these things can be massively profitable once you get to a certain point.
    0:05:35 As it relates to you, as it relates to you advice,
    0:05:39 the specific crowds out there general, you want to go very niche, very niche, right?
    0:05:41 You want to own something, absolutely own it.
    0:05:45 Two, you want to Mr. Beast it every week.
    0:05:49 What could we do with the sound, sound effects, production, editing?
    0:05:50 I think less is more.
    0:05:52 I’m always a fan of cutting more.
    0:05:54 Who could we bring in?
    0:05:56 What better guests could we find?
    0:06:00 And then the kind of next generation of podcasting is probably the reshuffling.
    0:06:02 There’s going to be a reshuffling of the deck, if you will.
    0:06:06 Podcasting was initially kind of some semi-famous people who did interviews.
    0:06:10 And then it went to people who are more talented, bringing different content and information.
    0:06:13 In the interview format, I think it’s declining a little bit.
    0:06:19 Then there was a big trend around really highly produced podcasts, serial and crime podcasts.
    0:06:22 The problem with those is they’re expensive to produce.
    0:06:26 I think the next kind of generation or the next reshuffling of the podcast stack
    0:06:30 is going to happen because of the following trend, YouTube.
    0:06:34 And that is, if you don’t get as many views on YouTube as you get downloads,
    0:06:36 you’re no longer going to be a top 100 podcaster.
    0:06:40 The new distribution medium for podcasts isn’t Spotify or Apple.
    0:06:41 It’s actually YouTube.
    0:06:46 And now people are spending or more people are watching podcasts on YouTube
    0:06:47 than they are listening to them.
    0:06:49 So you need to up your video game.
    0:06:52 This is hard for me because the thing I love most about podcasts is my studio.
    0:06:54 It basically looks like a giant shaving kit.
    0:06:55 And I take it everywhere in the world.
    0:06:57 No matter where I am, I can do my podcast.
    0:07:00 And that’s a huge unlock for me because daddy likes to travel.
    0:07:05 So I’m in Sao Paulo, Cabo San Lucas, Las Vegas LA, then Las Vegas again in the last
    0:07:06 two and a half weeks.
    0:07:06 And guess what?
    0:07:09 No interruption in my podcasting.
    0:07:12 And unfortunately, to take it to the next level,
    0:07:16 I probably need to put more resources into video and a static studio space.
    0:07:20 I don’t know if you’re watching this right now, but I’m in my guest bedroom because we’re moving.
    0:07:22 And it’s not, well, what you call high production value.
    0:07:23 I mean, Jesus Christ, look at this face.
    0:07:25 I look like a fish that swam too close to a reactor.
    0:07:26 Makeup!
    0:07:28 Makeup!
    0:07:31 Anyway, at your level of downloads, it’s going to be difficult to monetize.
    0:07:34 You’ll sort of for a moment be tempted to have a B subscription.
    0:07:35 Don’t do that.
    0:07:38 I think subscription was a bad idea.
    0:07:40 If you’re kind of like Sam Harris, and you’re just so fucking talented
    0:07:42 that people pay a hundred bucks a year, fine.
    0:07:46 But what’s interesting about podcasting is there’s very few places to find a young,
    0:07:49 wealthy consumer if you’re an advertiser.
    0:07:54 They’re all on Spotify and watching Netflix, which means they don’t, they don’t see ads.
    0:07:58 So podcasting is one of the last places an advertiser can go to reach a young,
    0:07:59 wealthy audience.
    0:08:01 So the future is so bright for podcasting.
    0:08:02 You got to wear shades.
    0:08:05 Thank you for the question and good luck with your pod.
    0:08:07 Question number two.
    0:08:11 Hey, brother, really appreciate everything you do.
    0:08:12 This is Derek from California.
    0:08:17 And I would love to know your thoughts on Michael Burry’s skepticism on index investing.
    0:08:17 Thanks so much.
    0:08:20 This is super interesting.
    0:08:21 And I’m not that informed here.
    0:08:26 The big shorts Michael Burry has warned about this supposed bubble in passive investing.
    0:08:28 His take, the recent flood of money into index funds,
    0:08:33 feels a lot like pre-2008 craze around collateralized debt obligations, CDOs,
    0:08:37 the complex financial instruments that nearly collapse the global economy.
    0:08:42 So Michael told Bloomberg, like most bubbles, the longer it goes on,
    0:08:43 the worse the crash will be.
    0:08:48 Back in 2023, he made headlines by betting against the S&P 500 and the Nasdaq 100,
    0:08:51 taking out more than one and a half billion input options.
    0:08:54 He was wrong and paid the price according to his 13F filing.
    0:08:57 Michael closed that massive short position at a 40% loss.
    0:09:01 And while the one and a half billion was the face value of the bet,
    0:09:04 not the actual amount he put in, it still shows how risky shorting can be.
    0:09:07 Short investing is really difficult.
    0:09:10 That’s this isn’t the question, but short investing is really difficult
    0:09:12 because the natural trajectory of the medium and long term
    0:09:16 of the markets is up and to the right because of demographic growth and innovation.
    0:09:20 So I think Michael’s an interesting guy.
    0:09:21 I think he’s thoughtful.
    0:09:22 He’s kind of a perma bear.
    0:09:26 He’s always betting on a catastrophe and occasionally be a right.
    0:09:28 He’s a little bit like my colleague, Neera Rabini.
    0:09:30 But I always learned when I listened to Neural.
    0:09:34 But Neural is pretty much a pessimist and it’s kind of always warning of a crash.
    0:09:35 And he was right in no way.
    0:09:41 I personally believe that passive index investing is a really good strategy.
    0:09:41 Why is that?
    0:09:44 It’s easy to convince yourself you’re smarter than everyone else.
    0:09:46 It’s harder to be smarter than everyone else.
    0:09:48 And when everyone has access to all information,
    0:09:52 you just want to bet on innovation and the American economy and that
    0:09:56 the entire, you don’t need to find the needle in the haystack.
    0:09:58 I think you’re better off buying the entire haystack.
    0:10:02 And also the key that people don’t spend enough time thinking about
    0:10:04 is absolutely minimize your fees.
    0:10:06 Also, there’s a cost to stock picking.
    0:10:10 And that is you have to pick the stock, which means it takes mental bandwidth,
    0:10:15 which means you blame yourself when it works or you credit yourself
    0:10:18 unnaturally when it does work and start believing you actually know how to do this,
    0:10:19 which you probably don’t.
    0:10:25 How to get wealthy slowly, but some sort of passive matching program to your employer,
    0:10:28 the government that matches, there’s some of those programs here in the UK,
    0:10:31 get it out of your hands, have it taken out of your check automatically,
    0:10:35 max out any matching program you have to your employer through a government program,
    0:10:38 and then put it into passive index funds.
    0:10:43 Because if you’re Warren Buffett, fine, if you’re an amazing stock picker, fine,
    0:10:45 99.9% of us aren’t.
    0:10:49 And focus all of that additional energy you would spend trying to do analysis
    0:10:52 and commit yourself that you understand that Starbucks is going to go up
    0:10:54 and put it into your core job where you can make more money
    0:10:58 and then continue to invest in dollar cost average into index funds.
    0:11:03 So now the passive investing, people say, and I guess there’s some truth to the fact
    0:11:07 that when anything becomes too popular, it’s usually not the right strategy.
    0:11:11 I can see an era where there’s a great rotation out of the US,
    0:11:14 which is now 50% of the value of all stocks globally.
    0:11:16 It’s usually around a quarter to a third.
    0:11:21 And we see a redistribution or reversal of the flows out of the US
    0:11:23 into more emerging markets.
    0:11:25 So for example, I’m looking at some stocks in Brazil.
    0:11:29 See above can’t help but decide I’m a smarter stock picker than most people.
    0:11:33 But I have at least 30 or 40 different investments
    0:11:34 and I try to make them uncorrelated.
    0:11:37 So to a certain extent, I have a bit of an index fund that I’ve created myself.
    0:11:40 So I’m still a big fan of index investing.
    0:11:45 I just think that’s the best, most bulletproof way to establish economic security.
    0:11:47 Thanks for the question.
    0:11:50 We have one quick break before our final question.
    0:11:50 Stay with us.
    0:11:56 Support for PropG comes from Mint Mobile.
    0:11:58 Missing out on something big can really hurt.
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    0:13:11 But to land bigger customers, you also need security compliance.
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    0:14:09 Support for this show comes from Seven Rooms.
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    0:15:03 Welcome back. Question number three.
    0:15:06 Hey, Scott. It’s Connor from Raleigh, North Carolina.
    0:15:10 I’m a 31-year-old lead software engineer at a cybersecurity company
    0:15:12 and I’m reaching out for some life and career advice.
    0:15:18 I work fully remote and although I love my company and was recently awarded
    0:15:22 a quarterly performance award, I’ve been struggling with the isolation
    0:15:24 that remote work has brought to my life.
    0:15:29 Since COVID, I found myself spending nearly every day working from home,
    0:15:32 often rolling out of bed just minutes before my first meeting.
    0:15:36 This past fall, I attended a summit in Seattle
    0:15:40 where I spent a week working from the office and it was a game changer.
    0:15:44 The focus, structure, and energy of working in person
    0:15:48 felt like a major boost to my productivity and overall happiness.
    0:15:52 Since then, I’ve been seriously considering relocating to Seattle
    0:15:56 to work in the office daily. I think it could be a great move for my career
    0:15:59 and would help me regain the structure I feel like I’ve been missing.
    0:16:03 My wife is fully on board with the idea. She’s lived all over the world
    0:16:06 and grew up in Raleigh and I think that she would welcome a change in scenery.
    0:16:10 And her job is fully remote and she enjoys working remotely,
    0:16:12 so moving for her would be pretty seamless.
    0:16:14 Here’s the challenge.
    0:16:19 I have a three-year-old niece here in North Carolina, not far from me.
    0:16:23 Who means the world to me? Her dad is my twin brother
    0:16:26 and he’s been through a long and difficult battle with addiction,
    0:16:31 but is now in recovery. How do I balance my desire to work in the office
    0:16:35 and possibly accelerate my career with my desire to stay close with family
    0:16:38 and be a consistent president for my niece?
    0:16:43 Thanks so much, Scott. I’ve been a huge fan of yours for a long time now,
    0:16:45 ever since winners and losers back on YouTube,
    0:16:47 and I really appreciate the work that you do.
    0:16:50 Jesus Christ. Can it be my uncle, Connor?
    0:16:53 You sound like such a thoughtful, impressive young man.
    0:16:59 The first thing you should do is just take stock of your blessings.
    0:17:02 Let me get this. You’re a 31. You’re a lead software engineer.
    0:17:04 It sounds like you’re in a good relationship with your wife.
    0:17:06 You have a wonderful relationship with your niece.
    0:17:10 You obviously deeply care about your brother.
    0:17:15 I imagine he deeply cares about you and you’re close with his family.
    0:17:20 I mean, you’re the man. You’re definitely a role model
    0:17:21 for other men and people around you.
    0:17:28 I think you move. I think it’s important that you establish economic security
    0:17:32 and personal growth and emotional growth and happiness for you and your wife.
    0:17:37 You guys are going to be my guess is probably starting your own family pretty soon.
    0:17:43 And I think between FaceTime and maybe more than the occasional flight back to Raleigh,
    0:17:47 you can still maintain a really close relationship with your brother and your niece.
    0:17:50 Look, I think they would miss you,
    0:17:54 but my guess is they love you a great deal and want you and your wife to be happy.
    0:17:59 And I believe that in I don’t think anyone who has,
    0:18:02 who’s ambitious, young and talented should be in the office.
    0:18:03 You’re going to make more money in the office.
    0:18:06 You’re going to make deeper relationships.
    0:18:07 You’re much more likely to get promoted.
    0:18:12 It’s in being in a city when you’re young and you don’t have kids
    0:18:14 and you kind of dance between the raindrops and have a smaller apartment
    0:18:18 and enjoy all the benefits of a city like Seattle.
    0:18:19 Jesus Christ, a lot of rain.
    0:18:20 A lot of rain.
    0:18:22 I think you do this, brother.
    0:18:25 When you move and you shake it up a little bit,
    0:18:28 you may look back and say we didn’t do better, but it was the right move.
    0:18:29 I’m in London.
    0:18:32 I don’t love it here, but it was the right thing because it was good for my kids.
    0:18:33 It was good for a change.
    0:18:37 And I think if your brother’s on the path to recovery,
    0:18:38 I don’t know.
    0:18:41 I think you’re focused on yourself right now.
    0:18:44 What would your niece want for you when she’s 25?
    0:18:46 She would look back and think,
    0:18:50 “I have this wonderful uncle that loved me a great deal, and I loved a great deal.”
    0:18:54 But what I wish was that he was incredibly happy,
    0:18:57 that he was doing what built economic security for him and his family,
    0:19:00 made him and his wife the happiest.
    0:19:02 And you’re still going to be able to be an outstanding uncle,
    0:19:04 which it sounds like you are.
    0:19:06 And some, in some, Seattle, here you come.
    0:19:09 That’s all for this episode.
    0:19:10 If you’d like to submit a question,
    0:19:13 please email a voice recording to officehours@proffgmedia.com.
    0:19:16 Again, that’s officehours@proffgmedia.com.
    0:19:29 This episode was produced by Jennifer Sanchez and Caroline Shagren.
    0:19:31 Drew Burroughs is our technical director.
    0:19:34 Thank you for listening to the Proffy Pop and the Vox Media Podcast Network.
    0:19:38 We will catch you on Saturday for No Mercy, No Malice, as read by George Hahn.
    0:19:40 And please follow our Proffy Markets Pod,
    0:19:44 wherever you get your pods for new episodes every Monday and Thursday.
    0:19:48 Support for this show comes from Seven Rooms.
    0:19:52 For the restaurant operators out there who want to create more regulars on the regular,
    0:19:53 check out Seven Rooms.
    0:19:58 Seven Rooms is an all-in-one CRM marketing and operations platform
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    0:20:28 Amazon Q Business is the generative A.I. assistant from AWS.
    0:20:32 Because business can be slow, like wading through the mud.
    0:20:36 But Amazon Q helps streamline work,
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    Scott discusses the future of podcasting and gives advice on how smaller podcasts can best position themselves. He then speaks about Michael Burry’s skepticism on index investing and why he disagrees with his take. He wraps up with advice to a listener who is deciding whether to relocate so that he can work in the office. 

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  • Raging Moderates: Trump’s Day One Agenda, Syria’s Civil War, and 2025 Predictions

    AI transcript
    0:00:00 [MUSIC PLAYING]
    0:00:03 Support for the show comes from HubSpot.
    0:00:05 How do you begin to describe your job as a marketer?
    0:00:08 You have to generate leads, create content, and gather data.
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    0:00:13 With the help of Breeze, HubSpot’s collection
    0:00:16 of AI tools and features, like Content Remix,
    0:00:19 turn one piece of content into a suite of assets,
    0:00:21 pinpoint the best prospects, and level up your campaign’s
    0:00:24 KPIs with a new analytic suite.
    0:00:26 And most importantly, you’ll have a way easier time describing
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    0:00:31 Visit hubspot.com/marketers to learn more.
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    0:01:16 ConstantContact.ca.
    0:01:24 Amazon Q Business is the generative AI assistant
    0:01:25 from AWS.
    0:01:28 Because business can be slow, like wading through the mud.
    0:01:33 But Amazon Q helps streamline work.
    0:01:36 So tests like summarizing monthly results
    0:01:37 can be done in no time.
    0:01:44 Learn when Amazon Q Business can do for you at aws.com/learnmore.
    0:01:46 That’s aws.com/learnmore.
    0:01:51 Welcome to Raging Moderates.
    0:01:53 I’m Scott Galloway.
    0:01:55 And I’m Jessica Tarlove.
    0:01:58 Jess, are you at home in New York with your lovely children?
    0:01:58 I am.
    0:02:03 And we had a big three-year-old birthday bash on Sunday.
    0:02:05 Frozen-themed.
    0:02:06 I won’t sing for you.
    0:02:11 But it was toddler intense, to say the least.
    0:02:12 How was your weekend?
    0:02:13 You’re wearing a tie.
    0:02:15 In case people aren’t watching this, you’re very dressed up.
    0:02:18 Yeah, my weekend could not have been more different.
    0:02:21 I went with a group of 40 and 50-somethings
    0:02:26 to a castle in the Cotswolds where we drank and then got up.
    0:02:29 And about 30 people followed us into the middle of nowhere
    0:02:31 and loaded our shotguns.
    0:02:35 And we shot at birds.
    0:02:38 And then the best part was the dogs that came and collected
    0:02:39 the birds.
    0:02:42 Fortunately, I’m not a very good shot.
    0:02:47 So a lot of birds are around today
    0:02:48 because I’m not very good at it.
    0:02:50 But it’s a very British thing.
    0:02:51 It’s probably my first–
    0:02:52 it’s called a shoot.
    0:02:54 And the best part about it was one I got to go.
    0:02:58 I got to go with a friend, my friend John of John and Wendy.
    0:03:00 He’s a super impressive venture capitalist.
    0:03:02 But he loves shooting and he loves British culture.
    0:03:05 So he said, I’ll take you for your outfit.
    0:03:07 And I went and I bought this crazy outfit.
    0:03:09 You get these boots and these things
    0:03:10 you tie around your boots on.
    0:03:11 He was called these ridiculous socks.
    0:03:13 They look like leg warmers.
    0:03:16 Anyways, it was a very kind of down nabby meets murder
    0:03:18 kind of weekend.
    0:03:21 So all right, so before we get into it,
    0:03:22 I heard Jess actually, in addition
    0:03:25 to hosting great parties for three-year-olds,
    0:03:28 that you went to Donald Trump’s Patriot Awards last week.
    0:03:30 And it was the first time that you were actually
    0:03:33 in close proximity to the Donald.
    0:03:35 Give us your impressions after that event.
    0:03:36 Yeah, well, it was a vibe.
    0:03:39 So it’s actually Fox’s Patriot Awards.
    0:03:41 And Donald Trump was being honored.
    0:03:41 So I was there for work.
    0:03:43 We did a live show.
    0:03:45 I was just excited that Donald Trump gets a Patriot.
    0:03:47 That’s a shocker.
    0:03:47 Well, that must have been–
    0:03:50 Well, I wanted to blow your mind
    0:03:53 after you blew the minds of birds.
    0:03:55 Anyway, the Patriot Awards is something
    0:04:00 that we do annually and is actually really lovely.
    0:04:02 It’s all about honoring everyday heroes
    0:04:05 and people who’ve served the country.
    0:04:06 I’m sorry, go ahead.
    0:04:08 He is your president-elect.
    0:04:11 Just let me get it out and then you do whatever you want.
    0:04:12 Sorry, go ahead.
    0:04:13 Sorry.
    0:04:16 This was the first year that Donald Trump was there.
    0:04:18 Did they get a collective award?
    0:04:19 No, they did not get an award.
    0:04:20 Thank you for asking.
    0:04:21 Sorry, go ahead.
    0:04:22 Good.
    0:04:23 Are you sure?
    0:04:24 No, I’m not, but good.
    0:04:25 OK, OK, I’m going to do it.
    0:04:27 Anyway, so we were out there.
    0:04:32 We did a live taping of the five, which is always fun.
    0:04:35 I mean, some people who like me also got booed a little bit.
    0:04:36 You did?
    0:04:37 You got booed?
    0:04:38 Kind of like, yeah, well, you know.
    0:04:42 Like, joking, like, kind of funny, funny booze?
    0:04:43 Yeah, like, I didn’t cry or anything,
    0:04:44 but it’s never nice.
    0:04:47 And everyone– the rest of the cast is like, come on, guys.
    0:04:49 She’s actually even agreeing with us on this one.
    0:04:50 But I get it.
    0:04:54 It’s all part of it, and you get to play with the audience a bit.
    0:04:57 But the Patriot Awards– and it’s going for a few years,
    0:04:59 and we’ve done it in Florida.
    0:05:02 We did it in Nashville last year at the Grand Ole Opry,
    0:05:03 which was amazing.
    0:05:06 And you meet some pretty incredible people
    0:05:10 that are doing wonderful things for the country.
    0:05:14 And you can insert your Donald Trump joke later.
    0:05:18 But it plays into why this was such an interesting contrast
    0:05:18 for me.
    0:05:22 So the Patriot Awards this time honored–
    0:05:25 I don’t know if you remember this story about an NYPD officer
    0:05:28 named Jonathan Diller, 31 years old, out on Long Island.
    0:05:31 Routine traffic stop was shot and killed.
    0:05:33 He had a one-year-old son.
    0:05:38 His widow was the opening award recipient and speaker.
    0:05:44 And she was breathtaking, that this woman did not
    0:05:48 have a complete meltdown doing this, talking about her husband
    0:05:51 and his service and loving police officers.
    0:05:53 And if you remember, there was a big back and forth.
    0:05:55 Like, Donald Trump went to see the family.
    0:05:59 And Biden didn’t go, and it became this kind of touchpoint
    0:06:03 in the war over who actually backs the blue.
    0:06:06 And she, in her speech, says how great she thinks Donald Trump is.
    0:06:11 They had the UNC frat guys who protected the American flag
    0:06:13 from the pro-Palestinian protesters
    0:06:16 on Chapel Hill’s campus last spring.
    0:06:19 These whistleblowers from the Phoenix VA,
    0:06:20 the ones who actually ended up getting
    0:06:23 Shinseki, the VA secretary under Obama, fired.
    0:06:26 Basically, they exposed the VA for denying and putting off
    0:06:29 care for hundreds of veterans who would have lived
    0:06:33 had they gotten their care on time and this massive cover up.
    0:06:34 And so those are the kind of people
    0:06:36 that are being honored at this.
    0:06:40 And you’re in this room with a bunch of people
    0:06:42 who do not vote the same way that I did.
    0:06:46 And they love these people whose message is over and over again,
    0:06:48 we love the red, white, and blue, right?
    0:06:50 Like, America is the best place to be,
    0:06:52 even if we’ve gone through something terrible,
    0:06:55 like this poor woman losing her husband.
    0:06:57 And then a common current through all of it is,
    0:06:59 and we also love Donald Trump.
    0:07:02 There is a very good case to be made
    0:07:05 that Democrats do not show up well enough
    0:07:07 for these types of people,
    0:07:09 that we don’t talk about our patriotism enough,
    0:07:11 that we don’t talk about loving cops.
    0:07:12 – Yeah, I agree. – Yeah, I agree.
    0:07:14 – That’s my point, thank you. – Yeah.
    0:07:16 – Anyway, so all these amazing people
    0:07:18 who are getting these awards
    0:07:21 and giving really captivating speeches full of Americana,
    0:07:22 and then Trump comes out.
    0:07:25 I’ve, you know, I’m in the front table
    0:07:27 with a couple people. – Like, who do you sit with?
    0:07:29 Who’s the most fun to drink with?
    0:07:31 Who gets too drunk?
    0:07:32 Was Pete Hegseth there?
    0:07:34 Did he hit on you before like,
    0:07:35 throwing up and passing out?
    0:07:37 Is he still, does he go to that stuff?
    0:07:38 – I give up, let’s move on.
    0:07:41 I heard about your cable news cabinet from Pivot Though,
    0:07:43 and I didn’t make it, which was kind of a bummer.
    0:07:46 – I see you as sort of quiet power.
    0:07:47 I see you as like, head of fundraising.
    0:07:49 – Soft power. – Soft power,
    0:07:50 I can totally see that. – That’s fine.
    0:07:53 – Also, if you decide to ever run for Congress
    0:07:55 or Senate, I’ll head your fundraising.
    0:07:57 – Well, you’re honestly screwing me over
    0:07:58 with these conversations,
    0:08:01 because you’re making me seem a little–
    0:08:02 – It’s all about awareness.
    0:08:05 – They’re all presses, good press.
    0:08:08 – Yeah, junior senator from,
    0:08:09 wait, you grew up in New York, didn’t you?
    0:08:10 – New York, yeah.
    0:08:12 So me and AOC and the–
    0:08:14 – No, no, no, no, no, no, no, we’re running you
    0:08:16 for president, Kirsten Jillerranich.
    0:08:17 – Straight to the top.
    0:08:18 – Kirsten Jillerranich, Charles Schumer,
    0:08:21 in my opinion, are like weak, weaker and weakest,
    0:08:23 and I think they absolutely need a young,
    0:08:26 dynamic, centrist Democrat to primary them.
    0:08:29 There, I’ve literally got it figured out for you.
    0:08:31 I’ve got it figured out. – Always.
    0:08:32 – That’s why I’m here. – If you believe
    0:08:35 Senator Tarloff has a nice ring to it,
    0:08:38 then please DM me, I will take your name down,
    0:08:41 and when we decide, when Charles Schumer turns 140
    0:08:44 in 10 years, we can decide to primary him,
    0:08:47 and when everyone decides to kiss Kirsten Jillerbrand
    0:08:48 while being a thoughtful, nice woman,
    0:08:52 is totally ineffective, then we’ll primary her as well.
    0:08:54 I’m 100% behind this.
    0:08:59 Okay, before we go here, before we bust in the news,
    0:09:02 we wanna remind you to please follow Raging Moderates
    0:09:04 on your podcast platform of choice.
    0:09:07 If you want Senator Tarloff and you want Daddy
    0:09:09 to still have the money to go on his shoots
    0:09:14 and not kill birds, please just subscribe.
    0:09:16 Please help us out with that follow button.
    0:09:19 This week on Friday, we have an interview
    0:09:20 with Tim Miller from the Bull Work
    0:09:23 only on the Raging Moderates feed.
    0:09:24 A lot of our interviews and our better stuff
    0:09:26 is only on the Raging Moderates feeds.
    0:09:28 Be sure to check it out.
    0:09:30 Okay, in today’s episode of Raging Moderates,
    0:09:32 we’re discussing Trump’s promises
    0:09:34 for the first day of his tenure.
    0:09:38 Assad flees to Moscow with Syrian rebels captured Damascus.
    0:09:40 Biden’s preemptive pardons debate,
    0:09:43 the final house math and leadership shakeups,
    0:09:46 and finally our predictions for next year.
    0:09:48 All right, where should we get to?
    0:09:50 Let’s, over the weekend, President-elect Trump
    0:09:53 told NBC’s Kristen Welker he plans immediate action
    0:09:55 after taking office on January 20th.
    0:09:58 He vowed to pardon January 6th rioters on day one,
    0:10:00 extend his first term tax cuts,
    0:10:02 deport millions of undocumented immigrants,
    0:10:04 and push to end birthright citizenship.
    0:10:06 Trump also said he’d work towards a solution
    0:10:09 to protect dreamers, and he won’t impose
    0:10:11 new restrictions on abortion pills,
    0:10:13 on pardoning rioters, he claimed.
    0:10:16 – This is the most disgusting, filthy place.
    0:10:18 These people are living in hell.
    0:10:19 – Let me just–
    0:10:20 – And I think it’s very unfair.
    0:10:21 So yeah, most likely I’ll do it.
    0:10:25 – Jess, what did you make of this interview?
    0:10:28 – This felt like actually the kickoff
    0:10:30 to the new administration in a certain way.
    0:10:32 I know we have to get to inauguration,
    0:10:36 but it’s crazy how quickly I feel like things have turned.
    0:10:39 I don’t remember this when Biden won in 2020
    0:10:41 that he suddenly became the president,
    0:10:44 but Donald Trump is, like he said Notre Dame
    0:10:45 for the reopening.
    0:10:46 He is meeting with world leaders.
    0:10:48 He is meeting with Zelensky.
    0:10:51 It feels like everyone has just kind of shut the door
    0:10:55 on Biden and is like, hello, Trump, whatever that means.
    0:10:58 And choosing to go on Meet the Press,
    0:11:01 he has been interviewed by Welker before.
    0:11:05 I think definitely trying to send a mainstream signal
    0:11:06 right to the public.
    0:11:09 I’m going to be out here in these places
    0:11:11 that you recognize and you don’t have to come
    0:11:14 and find me on the Andrew Schultz podcast necessarily.
    0:11:19 But it was classic Trump in that the things
    0:11:23 that he was promising to do are the things that he said,
    0:11:25 depending on what your politics are,
    0:11:30 it fits exactly in the box that you have put him in.
    0:11:33 So he says, I’m ending birthright citizenship.
    0:11:35 I’m deporting families together, right?
    0:11:36 That was one of the big ones,
    0:11:38 which Tom Holman, who’s his borders are,
    0:11:42 had said on “60 Minutes” before when he was interviewed.
    0:11:44 So the idea is like, oh, we don’t have to separate families.
    0:11:46 Even if some of you are legal,
    0:11:47 you should just all go together
    0:11:51 and that he’s gonna jail Liz Cheney, right?
    0:11:55 So if you’re diehard maga, you like that for obvious reasons.
    0:11:59 And then if you’re more centrist or even a Democrat,
    0:12:01 you’re crapping your pants again, right?
    0:12:04 And saying this guy is going to do
    0:12:07 all of these terrible things to the country.
    0:12:11 And it’s just, it’s so difficult to pin him down,
    0:12:13 which I think is why he ended up winning
    0:12:17 because he’s whatever you want him to be, right?
    0:12:21 He’s a dream politician in that sense.
    0:12:23 And people have very legitimate arguments
    0:12:26 on both sides of the authoritarian coin
    0:12:28 as to which one he is.
    0:12:29 And that was my big takeaway.
    0:12:31 I mean, I wanna get into the specifics
    0:12:32 of some of these things,
    0:12:33 but what do you think about that?
    0:12:35 I don’t know if you watched it or…
    0:12:36 – I didn’t.
    0:12:37 The weird thing that’s happened to me
    0:12:41 is I have a tendency to believe that, okay,
    0:12:43 the wonderful thing about our checks and balances
    0:12:47 is that there’s a certain level of purposeful and transigence
    0:12:51 where it’s very hard to get stupid, sweeping things done.
    0:12:52 It’s also probably really difficult
    0:12:55 to get really genius, disruptive things done.
    0:12:58 And that it’s just unlikely.
    0:13:00 I don’t think these tariffs are gonna go through
    0:13:02 at anywhere near the magnitude.
    0:13:04 I can’t imagine, I would like to think
    0:13:06 that enough Americans look back
    0:13:08 on one of the great stains,
    0:13:10 one of the great stains of our society,
    0:13:13 and that was interning great Japanese-American citizens
    0:13:15 who for no other reason in the color of their skin
    0:13:19 as many of their sons were fighting in the European theater,
    0:13:22 that the moment we start housing, hosting,
    0:13:25 aggregating, concentrating immigrants
    0:13:27 and anything resembling a camp,
    0:13:31 that the media and people and citizens in that neighborhood
    0:13:33 are gonna go ape shit.
    0:13:35 So I wonder how much of this is really gonna happen.
    0:13:36 Now having said that,
    0:13:40 what I’m also growing into is realizing,
    0:13:41 I never thought,
    0:13:43 I was never worried about Roe v. Wade being overturned.
    0:13:44 I didn’t think there was any chance
    0:13:47 would ever actually get overturned and I was wrong.
    0:13:49 So nothing kind of surprises me anymore
    0:13:52 and along those lines in the last two weeks,
    0:13:57 I’ve had an iconic morning TV show host
    0:14:00 and an iconic tech billionaire call me
    0:14:04 and asked me about London.
    0:14:05 And I thought, oh great,
    0:14:06 you’re thinking about moving to London.
    0:14:09 I moved to London not because of America
    0:14:11 because I felt like I needed to leave.
    0:14:13 I moved because of America.
    0:14:16 Because America has offered me so much prosperity
    0:14:20 and just wonderful opportunity,
    0:14:22 I have the chance to give my kids an experience
    0:14:23 to live in Europe.
    0:14:26 These folks are scared
    0:14:29 and they’re actually thinking about relocating to Europe
    0:14:33 because they believe there’s a non-zero probability
    0:14:35 they are going to be persecuted.
    0:14:37 And I was just so flummoxed
    0:14:40 that these are not reactionary stupid people.
    0:14:42 These are household names
    0:14:45 that are incredibly successful.
    0:14:46 My first question is, you’re really,
    0:14:48 you’re seriously really worried.
    0:14:50 You really think he’s going to come for you?
    0:14:52 And they said, I don’t know,
    0:14:55 but I don’t need to live in a country where I don’t know.
    0:14:56 – Yeah.
    0:14:58 – The reason why America, in my opinion,
    0:15:01 across a lot of dimensions is so successful
    0:15:05 is you have to have a massive base of innovation
    0:15:09 to create economic value such that we have the taxes
    0:15:11 to pay for the best military in the world
    0:15:13 and to argue over entitlements
    0:15:14 and to argue over veterans affairs
    0:15:19 and to bail out banks or COVID stimulus.
    0:15:22 That top line number is really important.
    0:15:24 And to start, both of these people
    0:15:26 create tremendous economic growth.
    0:15:29 Both of these people, and I’m not being biased,
    0:15:30 are good people.
    0:15:32 They’re good people.
    0:15:34 I’m like, that’s the environment you want to create.
    0:15:37 – Where do you think, can you handicap
    0:15:39 what you think is going to happen post-election?
    0:15:43 – I don’t know, I think– – That’s a difficult question.
    0:15:44 – Yeah, I don’t.
    0:15:46 – You can say I don’t know.
    0:15:48 – I mean, I don’t know an exact number.
    0:15:51 I do know, which we’ve talked about a few times,
    0:15:56 that what Trump cares about most is economic prosperity,
    0:15:58 because that’s what he knows he’ll be remembered for,
    0:15:59 either good or bad.
    0:16:02 And frankly, it’s what got him across the line
    0:16:03 in the 2024 election,
    0:16:05 that people had a favorable view
    0:16:08 of what the economy looked like when he was president.
    0:16:11 And I’m curious as to what you think about,
    0:16:14 I get it that the fear mongering
    0:16:19 that is rooted in some very genuine policy chops
    0:16:22 on people like Stephen Miller or Tom Holman, et cetera,
    0:16:26 that are founded in xenophobia, as far as I’m concerned.
    0:16:27 All of that is very–
    0:16:28 – And it’s founded in bullying
    0:16:29 when they were in the eighth grade,
    0:16:30 but I agree with you.
    0:16:32 – But definitely Stephen Miller, I don’t know about Holman.
    0:16:34 He seems like he was always a bully,
    0:16:39 but there are a lot of immigrants
    0:16:42 and successful immigrants and well-educated immigrants
    0:16:44 that are very big supporters of the president.
    0:16:47 I mean, I was looking at the pictures of JD Vance
    0:16:48 from Thanksgiving.
    0:16:50 He’s married to Usha Vance,
    0:16:52 whose parents are Indian immigrants.
    0:16:56 He’s with her family for Thanksgiving.
    0:16:59 He’s a mixed family.
    0:17:03 And I would assume a lot of people in that group
    0:17:05 are big fans of Donald Trump.
    0:17:07 Donald Trump is out there saying,
    0:17:10 I’m going to cut regulations like you’ve never seen before.
    0:17:13 He saved $200 billion in cut regulations in the first term.
    0:17:15 He wants to go even further.
    0:17:17 I know there are a lot of people who run businesses
    0:17:19 that are excited about that who feel like,
    0:17:21 yeah, you can be successful here,
    0:17:22 but you can be even more successful
    0:17:25 if we get rid of some more of this red tape.
    0:17:28 I’m concerned about certain pieces of quote unquote,
    0:17:31 red tape that we need like climate protections
    0:17:32 and things like that.
    0:17:34 But there are going to be a lot of people who think
    0:17:38 that this is actually a good place to be doing business
    0:17:40 with Donald Trump in the White House
    0:17:45 versus a more regulatory minded Democrat.
    0:17:46 – It’s a great point.
    0:17:48 And on the issue of immigration,
    0:17:50 we have someone who’s worked with us for a long time
    0:17:52 who’s incredibly talented
    0:17:54 and English is her fifth language.
    0:17:57 And yet she’s arguably our most talented
    0:18:00 copywriter editor just in around immigration.
    0:18:02 While she’s very progressive,
    0:18:04 while immigration, I haven’t stated explicitly,
    0:18:07 but I know I’m fairly confident saying
    0:18:09 she doesn’t want people rounded up.
    0:18:12 But she says, look, I waited in line to get here
    0:18:15 and it took me seven years and I did it legally.
    0:18:20 And so many people in America seem to feel
    0:18:22 that we should just have open borders.
    0:18:23 I was like, which is it?
    0:18:24 Can I come?
    0:18:26 Can my parents come now?
    0:18:26 Which is it?
    0:18:27 I waited in line.
    0:18:29 And what’s interesting, we saw in this election
    0:18:31 is a lot of recent immigrants
    0:18:36 are the most pro-Trump’s immigration policies
    0:18:41 that they feel like it’s just absolutely gotten out of control.
    0:18:44 It’s gonna be, I’m just sort of fascinated to see
    0:18:46 how the dynamics of what is effectively
    0:18:48 sort of a semi-Lame Duck president,
    0:18:52 he’s especially Lame Duck after 2026
    0:18:56 and push back on economic policies should inflation take up.
    0:19:01 And also, is he has a negotiating tactic starting really high
    0:19:05 saying, okay, tariffs of 100% and then going down to 20.
    0:19:08 And the thing that scares me about saying,
    0:19:13 I’m never gonna deny people access to their abortion pills.
    0:19:16 Well, okay, but if you keep appointing conservatives
    0:19:18 to the Supreme Court, it’s gonna be a lot of land.
    0:19:19 You don’t have to do it yourself, yeah.
    0:19:21 That’s definitely a concern.
    0:19:24 And there is no one at the top levels of the administration,
    0:19:26 even with these appointments
    0:19:31 that I can look to and feel secure about something like that.
    0:19:37 I mean, they all feel like power, power, power people.
    0:19:41 Let’s take a quick break, stay with us.
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    0:23:02 – Okay, so what’s next here?
    0:23:04 Let’s go to something a little bit more fun.
    0:23:05 – Let’s go light Syria.
    0:23:07 – Let’s talk to, let’s talk about Assad.
    0:23:09 So the Assad family’s 50 year rule over Syria
    0:23:13 came to an end following a swift rebel offensive.
    0:23:17 President Bashar al-Assad fled to Moscow with his family
    0:23:18 where they were granted asylum.
    0:23:20 President Biden called the regime’s fall
    0:23:23 a historic opportunity for Syria to rebuild
    0:23:25 while warning of risks ahead.
    0:23:29 Rebel leader Abu Muhammad al-Jalani speaking in Damascus
    0:23:32 hailed the victory as one for the entire Islamic nation
    0:23:34 and pledged protection for minorities
    0:23:37 under the new leadership by his HDS group.
    0:23:39 I think this quite frankly is the most undercovered story
    0:23:41 in the world right now.
    0:23:43 – Totally, well, it was definitely undercovered
    0:23:45 for the first 12 days.
    0:23:48 And then it’s Syria fell on the 13th day
    0:23:49 and everyone was like, oh, hey,
    0:23:51 there’s something going on here.
    0:23:55 I felt, I got chills watching some of this,
    0:23:59 especially the footage of the prisoners being freed
    0:24:03 from, I don’t want to mispronounce, the Sednaia prison,
    0:24:06 that huge complex in Damascus.
    0:24:10 But this guy, Jalani, who’s the head of HTS,
    0:24:11 which is the main rebel group.
    0:24:15 So there’s an amalgamation of rebels
    0:24:17 that have come together to do this.
    0:24:20 Seems like with some pretty heavy help from Turkey,
    0:24:24 but he is the figurehead of everything at this moment.
    0:24:27 He seems to be quite charismatic.
    0:24:29 He’s former al-Qaeda, which is interesting.
    0:24:30 And he’s been imprisoned before
    0:24:34 and has had changed from, I guess, a jihadist
    0:24:39 to a Syrian nationalist, though they are,
    0:24:41 they’re very heavy Islamists,
    0:24:44 as many sists that I put into one sentence.
    0:24:49 But I have enjoyed, I guess, what he has had to say so far.
    0:24:52 He’s ordered that all of the borders be opened
    0:24:53 and that anyone who was displaced,
    0:24:56 you know, there are 14 million Syrians
    0:25:00 who have been displaced over the last 13 years.
    0:25:03 And they’re flying the Free Syria flag at the embassy
    0:25:06 as it was watching it up in Sweden.
    0:25:09 There are 200,000 refugees that they’ve taken
    0:25:10 over the years.
    0:25:13 He’s said that there’s amnesty
    0:25:16 for all Syrian soldiers and conscripts.
    0:25:17 Like no questions asked.
    0:25:19 You wanna come back and be with us.
    0:25:20 You can be with us.
    0:25:23 I don’t know if this will hold,
    0:25:25 but he’s also commanded his troops
    0:25:28 that they cannot interfere with women’s clothing at all.
    0:25:31 So we’ll see how that holds up.
    0:25:33 But it is fascinating geopolitically.
    0:25:38 I mean, if Ukraine hadn’t taken Russia apart to this level
    0:25:41 and if Israel hadn’t hurt Iran and Hezbollah
    0:25:44 to the level that they have in the last couple of months,
    0:25:46 this would never have been possible
    0:25:48 because Syria just, Assad couldn’t do it
    0:25:51 without Russia and Iran anymore.
    0:25:54 And that seems to be why this happened.
    0:25:56 But what are your initial thoughts?
    0:25:58 – I agree a lot of the initial complexion
    0:26:00 and body language is very positive.
    0:26:03 But this is sort of a proble bringing together
    0:26:06 a group of people from some very bad organizations.
    0:26:10 So there’s some risk here in the Israeli sense at risk
    0:26:12 and they’ve actually been intensely bombing
    0:26:17 and attacking military sites and munitions,
    0:26:20 caches inside of Syria thinking,
    0:26:22 we don’t know anything about these people
    0:26:25 and we don’t want them to have access to these weapons.
    0:26:26 There’s no getting around it.
    0:26:28 Bashar al-Assad, that regime,
    0:26:30 him and his father, a murderous regime,
    0:26:32 I think somewhere between half a million
    0:26:34 and a million Syrians have been killed,
    0:26:36 gas attacks on their own people.
    0:26:39 Now, the world didn’t seem to be that outraged by it
    0:26:41 because it wasn’t Jews killing these people,
    0:26:42 but that’s another talk show.
    0:26:45 But the thing that strikes me about this
    0:26:50 is that we have such a self-hate for America.
    0:26:55 We are so remiss and I believe at the hands of an America
    0:26:58 where they see the top 1% doing better than them,
    0:27:00 at the hands of platforms that have been weaponized
    0:27:01 by bad actors that want to divide us
    0:27:03 and get us to hate each other.
    0:27:07 We don’t recognize that America and the West
    0:27:09 are winning geopolitically.
    0:27:12 And that is Bashar al-Assad, who does not share our values,
    0:27:16 immediately when she got real, turned to Russia.
    0:27:18 But here’s the problem.
    0:27:21 A Russia is like, sorry, boss, we got our own issues
    0:27:24 because unbeknownst to me,
    0:27:25 where I thought I was gonna roll into Kiev
    0:27:27 in about seven days,
    0:27:31 the West backing the incredible Ukrainian army
    0:27:33 is killing about 1,500 of my people a day.
    0:27:34 I’ve lost half a million people.
    0:27:36 I just don’t have the time, the resources or the energy
    0:27:38 to come in and back you up.
    0:27:40 And then he turned to his other friend, Iran.
    0:27:43 And Iran’s like, well, I don’t know if you’ve heard,
    0:27:44 but in addition to you,
    0:27:48 our proxies, including Hezbollah, the Houthis and Hamas
    0:27:49 are not doing that well
    0:27:52 and our air defenses have been taken down.
    0:27:55 And we’re a lot less popular amongst the Iranian people
    0:27:58 than Hamas is among the Palestinian people.
    0:28:00 Sorry, boss, we can’t show up.
    0:28:05 So when you think about really bad people, Assad, Putin,
    0:28:07 the Islamic regime and Iran,
    0:28:12 the West being unified around their support of Ukraine,
    0:28:13 you know, we’re winning.
    0:28:16 And I don’t, it, it bums me out
    0:28:20 that people don’t high five the Wests in our alliance
    0:28:22 and our commitment to American values,
    0:28:24 our support of Israel,
    0:28:28 which has kicked such serious ass over the last,
    0:28:30 since October the 7th over the last 14 months
    0:28:32 doing our dirty work for us,
    0:28:35 taking more people off the most wanted terrorists list
    0:28:36 in six weeks.
    0:28:38 And we’ve managed the last 25 years,
    0:28:40 totally defanging this,
    0:28:44 this quiet supposedly sleeping giant of Hezbollah
    0:28:47 with the most precise anti-terrorist action in history,
    0:28:50 going into Syria and making sure they don’t have weapons
    0:28:53 in case these guys, you know, aren’t as warm and cuddly
    0:28:55 as they’re pretending to be right now.
    0:29:00 But basically Iran, Russia and Syria, this triumvirate,
    0:29:01 oh, in North Korea is sending people
    0:29:04 into a meat grinder now in Russia.
    0:29:06 This is an enormous, this is,
    0:29:09 essentially this is an indicator
    0:29:11 that our good cholesterol has never been higher
    0:29:15 and our bad cholesterol has never been lower globally.
    0:29:17 You know, we are geopolitically,
    0:29:18 the good guys are winning here
    0:29:21 and the bad guys are just getting increasingly fucked.
    0:29:25 They are having Putin, the Islamic regime and Assad
    0:29:29 are having really bad days a lot.
    0:29:32 And it strikes me that we never take time
    0:29:37 to recognize how talented our security apparatus is,
    0:29:41 how resolute and thoughtful and committed we’ve been
    0:29:44 around joining forces to support Ukraine.
    0:29:49 So I’m just, I’m both excited about it, possibly,
    0:29:52 but I’m also disappointed that we don’t take more
    0:29:54 of a victory lap for the West
    0:29:58 and also recognize that Israel, in my opinion,
    0:30:02 is essentially destabilizing the world for bad people
    0:30:03 and stabilizing the Middle East.
    0:30:05 In my view, over the medium and long-term,
    0:30:09 the Middle East is gonna be a much less dangerous place.
    0:30:12 It’s one of those things that’s so difficult to understand.
    0:30:14 Do you know what Bashar al-Assad, you know, he was,
    0:30:16 he and his wife were educated in the United Kingdom.
    0:30:19 Do you know what he was educated as?
    0:30:19 – No.
    0:30:21 – He’s an ophthalmologist.
    0:30:23 I mean, it’s such an interesting study
    0:30:27 in how people descend into hell, right?
    0:30:29 This guy was helping people see again.
    0:30:31 This guy was doing cataract surgery.
    0:30:36 And then, you know, fast forward 15, 20 years later,
    0:30:37 or not even know if it’s that long,
    0:30:39 he’s gassing his own people.
    0:30:41 – But his dad was always doing this.
    0:30:45 I mean, that was a facade.
    0:30:47 I mean, I’m glad that some people can see better
    0:30:51 because of him, but Assad was raised in this.
    0:30:55 I mean, his family’s been in power for 50 years.
    0:30:58 His wife and I, from when I lived in London,
    0:31:00 there are a lot more people floating around there
    0:31:01 who know these people.
    0:31:04 And I heard similar, oh, she’s lovely.
    0:31:05 Give her a chance.
    0:31:07 No fucking thank you.
    0:31:11 You knew what you were marrying into, at the very least.
    0:31:13 But it is, I don’t know.
    0:31:18 I’m all for people getting great educations, of course.
    0:31:24 But I do hate that we share institutions
    0:31:26 with some of the world’s most evil.
    0:31:29 That really does burn me.
    0:31:32 And this is one of those examples.
    0:31:35 There were debates constantly at LSE about this,
    0:31:38 about what money they would be taking from the Middle East
    0:31:40 and who was gonna get to go.
    0:31:44 And remember that about Ben Laden’s kids that went to Harvard.
    0:31:46 I don’t think everyone should be punished
    0:31:47 for what their parents did.
    0:31:52 You may not go into the family business as it were,
    0:31:54 but Assad surely did.
    0:31:59 And on the Israel front, I totally agree with you.
    0:32:02 I think the issue about us taking a step back
    0:32:06 and spending more time reflecting
    0:32:07 on how well the West is doing
    0:32:10 or that these are good moments for Western values,
    0:32:14 that is not computing for the average American citizen.
    0:32:18 And I think a lot of it is due to the cost of all of this,
    0:32:19 that they’re being hit constantly
    0:32:23 with a barrage of information around,
    0:32:26 you can’t get X thing for your kids,
    0:32:28 but we’re sending another billion dollars
    0:32:30 for people you’ve never met in your life
    0:32:32 or that you feel completely disconnected to.
    0:32:37 And that became such a key plank of Trump’s candidacy.
    0:32:38 Where he was just like,
    0:32:42 America first means that your kid should get a good education
    0:32:44 and shouldn’t have a classroom full of kids
    0:32:46 who are from another place and are here illegally,
    0:32:49 or that that money that we’re sending abroad
    0:32:53 should be going to you first.
    0:32:55 And I understand for someone who is not living
    0:32:57 as much of a charmed life as we are,
    0:33:00 how that is persuasive.
    0:33:03 It also made me think back to the red line
    0:33:06 with Obama about Assad.
    0:33:10 And that as much joy as I was feeling,
    0:33:15 that maybe this would be a real positive future
    0:33:18 for the people of Syria who have endured
    0:33:21 more than my mind can even process.
    0:33:25 I’m thinking, how did we let this continue?
    0:33:28 What we saw the videos of the mass graves,
    0:33:30 we knew he was gassing his own people.
    0:33:32 We had a red line.
    0:33:34 – Huge stand on Obama’s legacy, yep.
    0:33:36 – Totally, and it does seem like that has been
    0:33:40 one of the kind of lessons or big threadlines
    0:33:41 in the aftermath of the election.
    0:33:44 – A lot of people think Putin went into Ukraine.
    0:33:46 I mean, these red lines,
    0:33:47 when they no longer became lines,
    0:33:51 a lot of people would argue that we were no longer–
    0:33:52 – That he went to Crimea
    0:33:55 because we don’t stand tall about this, yeah.
    0:33:57 – We gave him a green light.
    0:33:58 The thing that disappoints me,
    0:34:01 I think it’s politically advantageous
    0:34:04 and somewhat short-term minded,
    0:34:08 expedient way of political opportunism.
    0:34:10 You’ve never met anyone in Ukraine.
    0:34:10 Do you really care?
    0:34:12 Your son’s not doing well.
    0:34:15 Do you really care about territorial sovereignty in Ukraine
    0:34:18 when a 12 pack of bounty is $30?
    0:34:20 Would frustrates me more?
    0:34:22 I respect the fact they play that political opportunism.
    0:34:26 What frustrates me is that we don’t have a Democrat
    0:34:28 who can punch back and say, okay,
    0:34:31 that’s the same argument that was made to FDR.
    0:34:34 And they kept us out of the war too long in ’39.
    0:34:38 That was the same argument that Parliament made to Churchill
    0:34:40 about staying out of,
    0:34:42 we don’t, he could have cut a deal with Hitler
    0:34:45 and saved the Britain, at least in the short-term.
    0:34:48 When fascists or murderous autocrats invade Europe,
    0:34:51 it usually doesn’t end well when we just let them.
    0:34:53 And then to go straight to the numbers.
    0:34:56 And that is, I would have gone on offense.
    0:34:59 There are few investments that have shown a greater ROI
    0:35:03 than our and Europe’s greater investment
    0:35:06 than the US’s in the support of the Ukrainian army.
    0:35:10 We’re talking about $60 to $80 billion.
    0:35:12 I think it’s maybe over a hundred now.
    0:35:14 But when you look at, we spent $800 billion a year
    0:35:16 on our military and in exchange,
    0:35:19 if someone had come to us and said, you know what?
    0:35:24 I’m gonna take out a third to almost half
    0:35:26 of Russia’s kinetic power.
    0:35:28 I’m going to delegitimize their army.
    0:35:32 I’m going to take out a half a million troops.
    0:35:33 I’m going to make it less likely
    0:35:36 that China invades to Taiwan
    0:35:38 ’cause they see what a small, motivated,
    0:35:42 technically sophisticated defense force can do.
    0:35:45 Would you pay $80 billion for that?
    0:35:48 We would hit that bid all day long.
    0:35:51 This was, instead of apologizing
    0:35:53 and talking in broad sweeping strokes,
    0:35:55 they should have said, folks,
    0:35:58 if we had been offered the ability, Russia’s our enemy,
    0:35:59 Russia wreaks havoc.
    0:36:03 Russia takes oil prices up purposefully.
    0:36:07 Russia creates instability, greater likelihood of war.
    0:36:11 For $80 billion, we’re gonna pull the mask off this clown.
    0:36:16 We’re gonna absolutely decimate the reputation
    0:36:19 and we’re gonna take out a third to half of their kinetic.
    0:36:21 And Americans won’t die for it.
    0:36:23 And that’s an important part.
    0:36:23 Great point.
    0:36:26 And not a single American boot on the ground?
    0:36:28 Yeah, I’m in training, but not dying.
    0:36:31 For seven, our federal budget is $7 trillion.
    0:36:36 So I need about 1%, for 1%–
    0:36:38 I need a penny.
    0:36:40 Yeah, I need a penny on the dollar to do this.
    0:36:43 This is the best investment America has made
    0:36:44 in the last 10 years.
    0:36:45 But no one says it like that.
    0:36:46 And the way that they wrote–
    0:36:49 Well, not until the new junior senator from New York.
    0:36:50 Hey now.
    0:36:51 There you go.
    0:36:53 And her friend who shoots birds.
    0:36:57 No one conveys it in those terms
    0:37:00 because we are always into the soaring rhetoric
    0:37:02 about protecting democracy.
    0:37:07 And people like to hear we took out X amount of terrorists.
    0:37:09 That’s what they wanna hear in all of this.
    0:37:13 Or Vladimir Putin is flipping out
    0:37:18 because he has lost control of these 10 areas.
    0:37:21 Right, and this is what their economy looks like.
    0:37:24 And I don’t wanna say that there aren’t any Democrats
    0:37:26 that communicate well about these things.
    0:37:28 I think especially the folks who are veterans
    0:37:30 that know exactly what this fight means
    0:37:33 are good about it, like the Jason Crows of the world.
    0:37:36 But you know who I think does a pretty decent job?
    0:37:37 Cocaine Mitch.
    0:37:39 I listen to Mitch McConnell talk about why we need
    0:37:44 to continue to send money to Ukraine and to Israel.
    0:37:47 And you can tell that that man deeply feels this.
    0:37:49 And I know that a lot of Republicans,
    0:37:51 especially the MAGA wing,
    0:37:54 detest him probably for being this,
    0:37:56 having this level of clarity.
    0:38:00 – Okay, let’s take a quick break.
    0:38:01 Stay with us.
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    0:40:49 – Welcome back.
    0:40:51 Since Hunter Biden’s pardon,
    0:40:53 there’s been chatter about whether Biden should issue
    0:40:55 preemptive pardons for other people
    0:40:57 that Trump has openly targeted,
    0:41:00 including Adam Schiff and Liz Cheney.
    0:41:02 Political reports, there’s a heated internal debate
    0:41:05 on the White House, but Biden hasn’t weighed in yet.
    0:41:07 Supporters, including Brendan Boyle,
    0:41:10 say Trump’s move to put Kashpatel in charge of the FBI
    0:41:12 shows this isn’t just hypothetical.
    0:41:15 Shift, ironically, is urging Biden not to do it,
    0:41:18 saying it would look defensive and unnecessary.
    0:41:21 Jess, pardons, what are your thoughts?
    0:41:23 Do you think that doing this preemptively
    0:41:25 is a smart move or a bad precedent?
    0:41:27 – It could be both at the same time,
    0:41:31 but the problem is there’s no crime.
    0:41:35 They haven’t been charged with anything.
    0:41:37 I mean, there’s even though to be within the Democratic Party,
    0:41:40 I don’t know if you saw Bill Clinton was being interviewed
    0:41:42 and it came up about Hunter’s pardon
    0:41:44 and how he had pardoned his half-brother,
    0:41:45 I think, or step-brother.
    0:41:48 And he said, “But he served time.”
    0:41:50 There’s a big difference between even just getting convicted
    0:41:51 and then getting a pardon,
    0:41:54 which is what had happened with Hunter,
    0:41:56 but let alone someone who hasn’t even been convicted
    0:41:57 of anything.
    0:41:59 And it scares me for these people.
    0:42:01 I think the fact that Kashpatel has an enemy’s list
    0:42:03 in his book, “Government Gangsters,”
    0:42:06 and I’m sure has been adding to it on a nightly basis,
    0:42:08 like mirror, mirror on the wall.
    0:42:10 Who else should I put in jail?
    0:42:12 But what are you gonna do?
    0:42:17 Just say for crimes that they may have committed
    0:42:20 within the last five years
    0:42:23 and that they may commit in the next 20 years?
    0:42:24 I don’t understand it.
    0:42:26 I think Adam Schiff is completely correct.
    0:42:28 And then Jim Clyburn in the same interview
    0:42:30 where he’s talking about the pardons
    0:42:33 for the January 6th folks from the committee,
    0:42:35 not the January 6th rioters,
    0:42:39 said that Biden should pardon Trump
    0:42:42 and that it would clean the slate,
    0:42:44 I think was the term that he used.
    0:42:48 And I cannot think of anything that would enrage
    0:42:52 Democrats more than Biden pardoning Trump.
    0:42:54 Yeah, I don’t think that’s gonna happen.
    0:42:57 It used, my understanding is it used to be,
    0:43:00 let’s review some of the most outrageous miscarriages
    0:43:03 of justice because if you have a big system
    0:43:06 that unfortunately gets it wrong
    0:43:09 as anytime you rootinize anything,
    0:43:11 this is an opportunity that the president
    0:43:13 has sold the scratch and over to just kind of,
    0:43:16 as you said, clean the slate.
    0:43:18 And I wonder who started this mess?
    0:43:20 And I go to, was it Clinton when he pardoned
    0:43:22 one of his donors?
    0:43:25 I mean, pretty soon there’s gonna be an implicit number
    0:43:29 on pardons, the head of fundraisers is gonna say,
    0:43:30 well, I can’t care what you think.
    0:43:32 I can’t put this in email.
    0:43:34 But generally speaking, I think a donation
    0:43:37 of 10 million or more might get you a pardon
    0:43:39 for you and your family should something happen to you
    0:43:40 over the next four years.
    0:43:44 It just seems like we’re becoming that nation.
    0:43:47 Well, there was, at least there was rumor reporting
    0:43:49 that those were conversations going on
    0:43:51 in the first Trump administration.
    0:43:53 And then I imagine with him not even thinking
    0:43:55 about running again.
    0:43:57 I mean, who knows what he’s gonna be thinking about.
    0:43:59 But let’s just say that he knows that he has to leave
    0:44:03 after the next four years that there’s skies the limit
    0:44:07 on the kind of salacious pardon activity
    0:44:07 that’ll be going on.
    0:44:11 But Congressman Steve Cohen, who’s from Tennessee
    0:44:12 has proposed a constitutional amendment
    0:44:15 to limit presidential power, pardon power.
    0:44:18 And he’s never once had a Republican co-signer.
    0:44:20 The people are out there, you know, pants on fire,
    0:44:23 like losing their minds about what Biden did.
    0:44:27 I mean, this is something that gets abused on both sides.
    0:44:29 And they should really look at limiting it.
    0:44:32 And I was listening to a really interesting conversation.
    0:44:34 Preet Bihara and Joyce Vance have a podcast
    0:44:37 and they were talking about it, the Hunter Pardon.
    0:44:38 And they were on opposite sides of it.
    0:44:39 Preet was against it.
    0:44:43 Joyce Vance was for it, laying out their cases.
    0:44:46 But Preet Bihara said, which I thought, good on you.
    0:44:50 He said, if you are in the same position as Hunter,
    0:44:53 committed a similar crime, been convicted of it,
    0:44:56 got getting sentenced, reach out to me
    0:44:57 and let me defend you.
    0:45:01 Like come to me and I’m gonna try to help you get a pardon.
    0:45:02 I shouldn’t say defend you.
    0:45:03 They had already been defended.
    0:45:06 But he’s like, I will go to the president
    0:45:08 and say there are actually a whole host of people
    0:45:11 who are in the same position as your son
    0:45:15 that are deserving of pardons by this logic.
    0:45:17 And my guess is that they’re not,
    0:45:19 if those people come forward,
    0:45:22 are not gonna be given the same treatment.
    0:45:24 Again, we both think that we would have done
    0:45:26 the same thing for our children.
    0:45:31 But it’s a very ugly road that we are traveling on.
    0:45:33 – Okay, let’s move on, Jess.
    0:45:34 Let’s move on.
    0:45:36 Let’s talk about what’s happening in the house.
    0:45:38 With Adam Gray’s narrow win in California,
    0:45:39 we’re looking at a razor thin,
    0:45:44 way for thin margin of 217 to 215 Republican majority.
    0:45:46 If Democrats stick together,
    0:45:50 they’d only need one Republican to flip for a tie,
    0:45:52 which in the house means the vote fails.
    0:45:53 But even with that slim margin,
    0:45:55 Republicans still get the gavel,
    0:45:57 control committees and set the agenda.
    0:46:00 Meanwhile, Democrats are shaking things up,
    0:46:02 bumping older ranking members
    0:46:04 for younger, more telegenic folks.
    0:46:08 Jamie Raskin just ousted Jerry Nadler on judiciary,
    0:46:10 apparently with Pelosi’s support.
    0:46:15 On oversight, AOC has hinted she might go for Raskin’s old spot.
    0:46:19 Jess, what do you make of these leadership shakeups?
    0:46:23 – So first I wanna say that the narrative,
    0:46:25 if you would like to revisit the initial conversations
    0:46:28 about the election where you said we got shellacked,
    0:46:30 might need a little bit of a revision.
    0:46:33 So in the end, well, I don’t know.
    0:46:34 – On the presidential?
    0:46:39 – No, but the mood in totality was
    0:46:42 Democrats got their asses completely kicked
    0:46:45 and we ended up picking up two house seats
    0:46:47 and won very, very competitive races
    0:46:49 and held a lot of really important Senate seats.
    0:46:50 It could have been much worse.
    0:46:51 I mean, they were expecting
    0:46:53 that we were gonna lose Nevada,
    0:46:55 that we’re gonna lose Wisconsin.
    0:46:58 Pennsylvania was a big pickup with McCormick.
    0:47:01 Anyway, it was not as bad as people make it out to be.
    0:47:05 In terms of the new chairs of the big committee is,
    0:47:08 I think it’s time for these things to happen
    0:47:09 and it’s folks- – Oh, you think?
    0:47:14 – Well, I don’t like to, I’m a traditional gal
    0:47:18 and I think that when people have served honorably
    0:47:21 and done these incredible things for the country,
    0:47:23 it’s very hard for me to get to the point
    0:47:26 where I wanna say, Nancy, you take a seat, right?
    0:47:27 You shouldn’t be doing this anymore.
    0:47:29 And I know she stepped back from being speaker,
    0:47:32 but she still holds her seat.
    0:47:34 And there are still a lot of young Democrats
    0:47:37 that wanna run for Congress in San Francisco.
    0:47:39 Jim Clyburn is still there.
    0:47:41 Steny Hoyer is still there.
    0:47:46 And while they might not be as powerful as they were before,
    0:47:48 this is rarefied air that they’re breathing, right?
    0:47:51 They’re only, was it 435 of them?
    0:47:55 And I think the transition to a new generation
    0:48:00 is bigger than they are allowing to happen right now.
    0:48:03 That said, it’s great to see Jamie Raskin doing this,
    0:48:05 though he’s in his sixties, this is not a kid.
    0:48:08 The AOC thing, I think, will be fascinating
    0:48:09 if it is what happens.
    0:48:11 And she’s clearly positioning herself
    0:48:16 for at least statewide election, maybe national,
    0:48:17 if she’s gonna run for president.
    0:48:19 But if you noticed at the DNC,
    0:48:21 and we were both very taken with her speech,
    0:48:23 great speech, one of the top ones
    0:48:25 from the convention, at least for me.
    0:48:37 She struck every note properly.
    0:48:40 She manages the economic populism, I think, better
    0:48:40 than anybody.
    0:48:42 She’s clearly moderated on a lot of stuff.
    0:48:45 But in interviews since then,
    0:48:48 she talks about upstate New York all the time.
    0:48:49 She was giving an interview with someone,
    0:48:51 she mentioned Buffalo twice.
    0:48:53 I’m like, have you ever been to Buffalo?
    0:48:57 So clearly she’s thinking about what does AOC look like
    0:48:59 beyond the Bronx and Queens, right?
    0:49:02 Like, what does AOC up North look like
    0:49:05 and wants to make sure that she is palatable
    0:49:08 to those people and getting a committee chair
    0:49:10 and getting to show off in those ways
    0:49:14 will be one route to potentially getting a Senate seat.
    0:49:17 So what do you think about the new Jen?
    0:49:18 Next, Jen.
    0:49:20 – I think Sharon is good.
    0:49:21 I think these people are way too old.
    0:49:23 We have the oldest legislative body.
    0:49:25 I believe in the world outside of Iran.
    0:49:27 I mean, it’s just insane that our leaderships
    0:49:29 become a cross between the walking dead
    0:49:31 and the golden girls.
    0:49:33 I don’t, this must be the most amazing job in the world
    0:49:34 because they never seem to want to leave
    0:49:36 unless it’s feet first.
    0:49:38 I would love mandatory retirement age.
    0:49:40 I just think in the US,
    0:49:42 most corporations are used to be 65.
    0:49:47 And because of gerrymandering and fundraising
    0:49:49 and Citizens United,
    0:49:53 these fossils keep getting reelected.
    0:49:57 And I love, a crisis is a terrible thing to waste.
    0:50:00 The fact that we let a convicted felon,
    0:50:03 a convicted rapist, an insurrectionist
    0:50:07 regain the White House means they should clean house.
    0:50:08 How did we let this happen?
    0:50:10 This was the way I see it.
    0:50:13 And Charles Schumer versus Mitch McConnell.
    0:50:17 Senator McConnell has played Senator Schumer
    0:50:19 like a fucking fiddle.
    0:50:21 Anna’s older, but he’s still got it
    0:50:23 in terms of his chess game.
    0:50:27 You show that, you brought up Speaker Pelosi.
    0:50:31 Speaker Pelosi has some of that Machiavellian, you know, Riz.
    0:50:32 She deserves it.
    0:50:35 By the way, she’s gonna make it nearly impossible
    0:50:37 for anyone to launch a campaign in her district.
    0:50:40 And then she’s going to decide to coordinate her daughter
    0:50:44 who by the way, was born when Castro declared martial law.
    0:50:47 That’s how old Speaker Pelosi is.
    0:50:52 So she’s not, I’ll be curious what happens in San Francisco.
    0:50:53 That’ll be an interesting race.
    0:50:57 But we need a new set of leadership and voices.
    0:51:00 And for God’s sakes, some of these people
    0:51:04 just need to get a gold fucking watch and leave.
    0:51:08 Or at least bring in, I mean, AOC’s policies to me,
    0:51:12 she’s not my cup of tea from a policy standpoint.
    0:51:15 She’s a leader and she’s telegenic.
    0:51:17 And she represents youth and she can speak to what it’s like
    0:51:19 to be a waitress and how important tips are
    0:51:21 and what it’s like to work for a living.
    0:51:23 And what it’s like to be a young woman in America.
    0:51:26 I mean, a young, you know, non-white woman in America.
    0:51:27 She’s fantastic.
    0:51:29 She’s a fantastic representative
    0:51:33 for the Democratic Party.
    0:51:35 Raskin, yeah, early 60s, fine.
    0:51:38 That dude, he was so quick on his feet.
    0:51:40 I might be being unfair, yeah.
    0:51:42 Oh yeah, he’s amazing.
    0:51:43 He’s fantastic.
    0:51:45 We need some gangsters to go in there
    0:51:48 and go toe-to-toe with these people.
    0:51:51 My favorite is, I think we talked about a long time,
    0:51:54 you mentioned his name, the congressman from Florida
    0:51:56 who chose- Oh, Moskowitz?
    0:51:59 Yeah, who moved to impeach Biden on that ridiculous panel
    0:52:02 ’cause he realized none of them had any desire to do it
    0:52:05 or had any, that this panel was just nothing
    0:52:09 but an attempt to feed Fox with more fodder
    0:52:11 for their evening programs
    0:52:13 and was wasting the time and taxpayers’ money.
    0:52:16 Anyways, they are just much,
    0:52:19 they’re just better than us, quite frankly.
    0:52:21 The Democratic Party suffers from something
    0:52:24 I suffered from my entire professional life.
    0:52:26 And that is the ability to discern the difference
    0:52:29 between being right and being effective.
    0:52:31 And we’d rather be right and get our asses kicked
    0:52:33 than effective.
    0:52:37 And we absolutely need to take this crisis
    0:52:40 as an opportunity to have a dramatic shift
    0:52:42 in leadership.
    0:52:44 Anyways, that’s my rant.
    0:52:45 Go ahead.
    0:52:47 I wasn’t really even a rant.
    0:52:47 I liked it.
    0:52:48 And I just want to add to it,
    0:52:50 connecting it back to our conversation
    0:52:52 about what’s going on in Syria.
    0:52:55 And it’s been a lot of good days for the West,
    0:52:57 but we haven’t been able to communicate it.
    0:53:02 I do think that hearing about the U.S. on the world stage
    0:53:05 from younger communicators, many of whom have served,
    0:53:08 will be a great benefit to the party
    0:53:10 and to the country in general,
    0:53:13 like Alisa Slotkin, who just won the Michigan Senate seat,
    0:53:18 Mikey Sherrill, who’s running for governor in New Jersey,
    0:53:20 Abigail Spanberger in Virginia,
    0:53:24 having a younger, more relatable face to people
    0:53:27 telling you about why it is so important
    0:53:31 to support our troops, Western values,
    0:53:35 these fights against dictators and totalitarians,
    0:53:38 I think will be much more resonant with people
    0:53:41 than hearing about it from relics of the past.
    0:53:44 – Senator Gallegos, Representative Moulton
    0:53:47 out of Massachusetts, Senator Duckworth.
    0:53:52 I think people in uniform deserve a hard look at their views.
    0:53:55 I mean, the most patriotic people in America
    0:53:58 are the ones, anyone with kids knows,
    0:54:00 loyalty and affection is a function of your investment.
    0:54:02 So your kids can end up being jerks,
    0:54:05 you’re still irrationally passionate about their wellbeing
    0:54:07 ’cause you have so much invested in them.
    0:54:08 And wouldn’t you know,
    0:54:09 the most loyal and patriotic Americans
    0:54:11 are the ones who’ve invested the most,
    0:54:13 specifically our veterans.
    0:54:16 And what’s so upsetting is the least patriotic
    0:54:17 are the ones who’ve received the most
    0:54:20 but haven’t invested a lot, I call them tech bros,
    0:54:23 but these are the people who are the most blessed
    0:54:25 and yet don’t want to acknowledge their blessings
    0:54:27 and shitpost America.
    0:54:32 Anyways, I do hope that we have a new cast of leadership.
    0:54:37 All right, Jess, anything else on your mind before we go?
    0:54:38 Oh wait, we’re supposed to do predictions.
    0:54:39 Hold on, hold on.
    0:54:41 Producers are freaking out. – That’s on my mind
    0:54:44 because it’s in our script.
    0:54:45 – It’s in our script.
    0:54:46 Okay, so before we wrap,
    0:54:47 this is our last regular episode of the year.
    0:54:50 So let’s talk 20, 25 predictions.
    0:54:52 It’s shaping up to be a big year
    0:54:54 with talk of tax cuts, entitlement reform
    0:54:56 and immigration changes, Jess.
    0:54:59 What do you think is on the horizon?
    0:55:01 – Well, politically speaking,
    0:55:03 I do want to talk about Taylor and Travis
    0:55:05 actually getting engaged or publicly engaged,
    0:55:10 but politics-wise, I do think at least on the small level
    0:55:12 that Trump is going to make good
    0:55:15 on the main planks of his campaign.
    0:55:18 So I think that there will be some immigration crackdown
    0:55:23 and I really hope that Blue City mayors and officials
    0:55:26 will play ball with ICE to turn over criminals
    0:55:30 so that we can avoid a deportation force
    0:55:32 the way that Tom Homan fantasizes about it.
    0:55:36 I saw Michelle Wu, who is the mayor of Boston
    0:55:38 talking about an absolute blanket no
    0:55:42 to cooperating with ICE and protecting all Bostonians.
    0:55:46 Criminals are, illegal criminals are not Bostonians.
    0:55:49 You should play ball with them to do that.
    0:55:51 Mayor Adams has already said that he will.
    0:55:52 Then again, he also wants a pardon,
    0:55:55 but I’m sure we are going to have some level
    0:55:56 of immigration change.
    0:55:57 It’ll be interesting to see what he does
    0:56:01 in terms of executive orders on the border,
    0:56:03 probably keeping in place a lot of what Biden
    0:56:04 has put in over the last year
    0:56:09 and in cooperation with President Scheinbaum of Mexico.
    0:56:11 I agree with you, small tariffs probably coming,
    0:56:16 not this huge 100%, 60% that he’s been talking about.
    0:56:19 Tax cuts, we’re storing the Trump tax cuts
    0:56:20 probably through reconciliation.
    0:56:22 The kind of question marks for me
    0:56:25 are around what Doge can really do
    0:56:26 if you’re not going to go after the Pentagon
    0:56:28 and Medicare and Social Security.
    0:56:31 They’re talking about, quote, “small entitlements,”
    0:56:33 things like food stamps, which are not that small
    0:56:35 to a lot of people, but means testing
    0:56:37 as much stuff as possible.
    0:56:39 And then, what could make it
    0:56:41 into a huge reconciliation bill?
    0:56:42 I was listening to Larry Kudlow,
    0:56:44 who was in the first Trump administration,
    0:56:46 now as a Fox business host,
    0:56:47 not going back to the administration,
    0:56:49 even though Trump wanted him.
    0:56:51 And he says that we are definitely going to have
    0:56:53 a big reconciliation bill
    0:56:56 that’ll probably be next September.
    0:56:59 And I’m curious to see what’s going in there.
    0:57:02 But I know that those tax cuts are a huge priority,
    0:57:04 especially when you look at who got them
    0:57:06 over the finish line, the billionaires,
    0:57:07 that are smacking their lips
    0:57:09 at the thought of another round of it.
    0:57:12 So those are my predictions.
    0:57:13 – I like it.
    0:57:14 – Yeah, okay.
    0:57:17 The Taylor and Travis part, or the Doge part.
    0:57:20 – But the thing they’re going,
    0:57:21 I don’t know if you hear this,
    0:57:23 the thing they’re, first off,
    0:57:25 my understanding is they are looking at the military.
    0:57:27 So for, I didn’t, I knew this, but I didn’t know it.
    0:57:29 The military has five air forces.
    0:57:31 Do we need five air forces?
    0:57:33 They, my sense is they are in fact,
    0:57:36 actually willing to address the military.
    0:57:37 The question I have around,
    0:57:39 whenever I hear means testing,
    0:57:40 I’m like, okay, let’s start with social security.
    0:57:42 And I realize that social security
    0:57:44 is technically an off balance.
    0:57:46 She said, yeah, we pay for it,
    0:57:48 but it still attacks on young people
    0:57:51 who are less wealthy than they’ve ever been
    0:57:52 relative to their seniors.
    0:57:54 And yet, I don’t understand why there wouldn’t be
    0:57:56 attacks on wealthy seniors.
    0:57:57 They create social security for young people,
    0:57:59 but that’s another talk show.
    0:58:01 But I wonder if we’re ever going to have
    0:58:04 a serious conversation around means testing social security
    0:58:05 or pushing the age back,
    0:58:08 given the fact that we’re all living so damn long.
    0:58:09 But, you know, no one,
    0:58:11 my sense is they don’t want to talk about that.
    0:58:13 Have you heard them talk about entitlements at all?
    0:58:15 – Yeah, a lot. – And what have they said?
    0:58:17 – And they’ve said that quote unquote,
    0:58:18 everything’s on the table.
    0:58:22 Medicare, social security,
    0:58:23 not an entitlement, right?
    0:58:24 You’ve paid in.
    0:58:25 I take your point, obviously,
    0:58:26 about it being attacks on young people
    0:58:28 who are never going to get to enjoy it.
    0:58:31 There would be, if you want to see civil war,
    0:58:33 take away Medicare and social security.
    0:58:34 So I don’t think that’s happening,
    0:58:36 but I do think– – Oh, I love Medicare.
    0:58:36 – Yeah. – Without it,
    0:58:38 let me clear this idea. – And Medicaid,
    0:58:40 frankly, which I mean, states are expanding,
    0:58:42 even Republican states at a rapid pace
    0:58:45 and seeing incredible feedback from it.
    0:58:47 And we talked about it, wasn’t the program
    0:58:52 that your data’s using, Medicaid program?
    0:58:54 – Yes, the home health care, yeah.
    0:58:57 Yeah, I don’t, what I don’t understand.
    0:59:02 – So they’re gonna go snap food benefits.
    0:59:05 It doesn’t sound like anyone’s talking
    0:59:07 about the child tax credit,
    0:59:08 which was one of the things they said they were gonna do.
    0:59:12 It’s just a lot of cuts versus helping people out
    0:59:15 to cut child poverty in half, but–
    0:59:17 – So my idea has always been,
    0:59:19 or one of them around health care,
    0:59:22 is lower Medicaid eligibility by a year,
    0:59:25 every year for the next 44 years
    0:59:29 until basically you do, you basically get away–
    0:59:31 – The way of the universal.
    0:59:34 – 100%, people love, people love Medicaid.
    0:59:37 And when you look at, I mean,
    0:59:40 we didn’t talk about the United health care issue.
    0:59:42 – Oh my God, yeah.
    0:59:44 – That’s gonna spawn a very,
    0:59:46 or already has a very interesting conversation
    0:59:49 around the fact that 40% of Americans
    0:59:53 have some sort of medical debt related to dental
    0:59:56 or traditional medical debt that impacts them
    0:59:57 and their family.
    1:00:00 This is, I think that’s been actually the tsunami
    1:00:04 we didn’t see coming in terms of political discourse.
    1:00:05 Any thoughts?
    1:00:08 – Yeah, well, I would love to, we don’t have time.
    1:00:13 But I was really disturbed to see
    1:00:15 the glorification of this murder
    1:00:19 and then people doxing other health care CEOs.
    1:00:22 And I understand we need tremendous reform.
    1:00:25 And some of these stories are absolutely harrowing.
    1:00:27 And I realized how lucky I am
    1:00:31 to have the health care problems that I do.
    1:00:32 ‘Cause I have some, right?
    1:00:35 I’m getting bills constantly first off,
    1:00:36 giving birth is still expensive
    1:00:39 even when you have platinum insurance and all of that.
    1:00:42 But obviously nothing compares to kids getting
    1:00:46 their chemo rejected and whatever people have to go through
    1:00:48 on a monthly basis with these people.
    1:00:53 But I thought it brought out some of the worst sides
    1:00:56 of the American populace looking at the reaction to that.
    1:00:58 What about you?
    1:01:00 – Over on Pivot Care and I were both saying,
    1:01:03 this is the wrong way to go about having a conversation
    1:01:04 and we’re horrified by it.
    1:01:06 And I got a lot of feedback.
    1:01:08 It sort of resonated and said,
    1:01:10 spoken like someone who’s overinsured
    1:01:13 or can afford health insurance.
    1:01:16 And some of the memes were just so puncturing, right?
    1:01:18 Like empathy is outside my coverage.
    1:01:23 And the reality is which,
    1:01:25 and this is no way justifies murder,
    1:01:27 but which health insurance company
    1:01:30 has the greatest percentage of rejected claims?
    1:01:31 You guessed it, UnitedHealthcare.
    1:01:34 – By a large part, it was like 20% more.
    1:01:39 And the reality is when you look at how a lot
    1:01:41 of these insurance companies have increased earnings
    1:01:42 over the last five or 10 years,
    1:01:46 it’s coming with algorithms and legal justification
    1:01:49 for identifying who is less likely to push back
    1:01:52 and rejecting claims.
    1:01:55 And it just goes, for me, it goes to the same place.
    1:01:56 I never used to think this,
    1:02:00 but I look at the UK system and the NHS has real issues,
    1:02:01 mostly around underfunding right now
    1:02:03 because they’re not able to add a quarter of a trillion dollars
    1:02:07 in four minutes post an earnings call in video.
    1:02:12 But I like the idea of nationalized healthcare
    1:02:15 for the 80 or 90% that want to use it
    1:02:17 and then having a private layer on top
    1:02:19 for people who want better service.
    1:02:23 The bottom line is this is just an industry
    1:02:26 where the profit motive begins to turn healthcare
    1:02:27 into sick care.
    1:02:30 And you’re going to have the same thing
    1:02:31 in any capitalist environment
    1:02:33 that is not perfectly regulated as this is not.
    1:02:37 You have regulatory capture among corporations
    1:02:38 and the top 10% who can afford it
    1:02:40 have the best healthcare in the world
    1:02:43 and the bottom 90 are being squeezed economically
    1:02:45 and the amount of despair and anxiety,
    1:02:48 the US healthcare system is causing people.
    1:02:49 At some point we’ve got to realize
    1:02:54 that regulatory capture around our food supply system,
    1:02:57 tremendous stress and anxiety around,
    1:03:00 oh, the bad news is your wife has lung cancer,
    1:03:02 the worst news is you’re going to go bankrupt.
    1:03:04 At what point does our healthcare system,
    1:03:08 at some point for the bottom 50%,
    1:03:09 if not the bottom 90%,
    1:03:11 at some point do we have to realize
    1:03:13 they’re the problem, they literally are the problem.
    1:03:16 They’re creating more anxiety, obesity,
    1:03:19 high blood pressure, deaths of despair.
    1:03:20 We’re going to lose 45,000 people to suicide.
    1:03:22 I’d like to know how many of those people
    1:03:25 would cite financial strain, specifically medical debt,
    1:03:28 which is now the number one cause of bankruptcy in America.
    1:03:31 How much death by suicide is that cause?
    1:03:34 So my prediction, I have two predictions,
    1:03:36 one’s a domestic one.
    1:03:38 I think the debate and the resurfacing
    1:03:42 of regulatory capture and the for-profit US model
    1:03:46 around US healthcare that has resulted in us paying $13,000
    1:03:51 per individual versus 65 to 8,500 for other G7 countries
    1:03:56 with shorter life expectancy, more anxiety and more obesity
    1:03:58 is just isn’t, it just isn’t working.
    1:04:00 That’s going to be the debate and the big discussion
    1:04:02 we weren’t expecting at this moment.
    1:04:05 And then on a geopolitical level,
    1:04:07 I think we’re going to see a revolution in Iran.
    1:04:12 I think Hamas had 70% support of Palestinians.
    1:04:15 The ruling party in Iran does not have nearly that support.
    1:04:18 It has a minority of people who supported.
    1:04:21 It’s actually, Iran’s actually a very young country.
    1:04:23 And there are a lot of people, I think,
    1:04:24 who are waiting to see weakness,
    1:04:28 which they have observed over the last couple of weeks
    1:04:30 with the fall of Assad and all of the Iranian proxies
    1:04:33 having kind of their being kneecapped.
    1:04:37 I think it’s going to give a lot of license and backbone.
    1:04:41 I bet there’s a lot of entities in Iran right now
    1:04:43 who are thinking, is this our moment?
    1:04:47 I think we’re going to see a revolution
    1:04:50 or a rebellion similar to what we’ve seen
    1:04:52 in Syria and Iran in 2025.
    1:04:54 Yeah, I didn’t realize we were doing global ones,
    1:04:56 but I like that one.
    1:04:59 Oh my God, I feel shamed, I feel shamed.
    1:05:02 No, I just, no, I like it, it’s good.
    1:05:03 I think it’s really good.
    1:05:04 I’m just curious with all of this,
    1:05:08 like where Israel fits in
    1:05:12 and whether a new Iranian regime, if such a thing happens,
    1:05:14 where they are in terms of relations with Israel,
    1:05:16 because the big accomplishment
    1:05:18 from the first Trump administration for me
    1:05:20 was the Abraham Accords.
    1:05:23 And I hope that we see further normalization
    1:05:27 of relations with Israel as-
    1:05:29 The kingdom will go first, I think.
    1:05:30 Well, yeah.
    1:05:32 Jared’s already on the WhatsApp about that, so.
    1:05:33 Oh, is that right?
    1:05:35 I don’t know, I just think it’s crazy
    1:05:39 that he made $2 billion off of Saudi
    1:05:41 and was WhatsApp-ing about it.
    1:05:42 Yeah, he raised $2 billion.
    1:05:43 It’s not fair to say he’s made it so far.
    1:05:45 We’ll see what he’s raised.
    1:05:47 Why are you defending Jared Kushner all the time?
    1:05:48 He was my student.
    1:05:49 I don’t care, you’ve probably had a lot of students.
    1:05:50 He was my student.
    1:05:51 All right, fine.
    1:05:53 Jared and Ivanka, they’re super nice.
    1:05:53 They’re super nice.
    1:05:55 And his brother, the brother, Josh Kushner,
    1:05:57 is a total gangster, he’s a great VC.
    1:05:58 I know, Carly Klaus is hot.
    1:05:59 Yeah.
    1:06:00 Oh, yeah, come on.
    1:06:01 That counts for a lot.
    1:06:02 Yeah, and they’re liberals.
    1:06:04 There you go, all right, that’s all for this episode.
    1:06:06 Thank you for listening to “Raging Moderates.”
    1:06:08 Our producers are Caroline Shagrin and David Toledo,
    1:06:10 our technical directors, Drew Burroughs.
    1:06:12 You can find “Raging Moderates” on its own feed
    1:06:13 every Tuesday.
    1:06:14 That’s right.
    1:06:16 What a thrill, “Raging Moderates.”
    1:06:17 Never mentioned that before.
    1:06:19 Can’t bring that up enough.
    1:06:21 “Raging Moderates” on its own feed,
    1:06:24 please follow us wherever you get your podcasts.
    1:06:26 (upbeat music)
    1:06:36 [BLANK_AUDIO]

    Scott Galloway and Jessica Tarlov dive into Trump’s big promises for day one of his presidency, the end of Assad’s regime in Syria, the heated debate over Biden’s potential preemptive pardons, the razor-thin House majority, and Democratic leadership shakeups. Plus, they give us their predictions for 2025.

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  • Prof G Markets: The UnitedHealthcare CEO Shooting, Amazon Takes On Nvidia, & 12 Days of OpenAI

    AI transcript
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    0:01:50 Seven Rooms, make magic, make money.
    0:01:52 Today’s number, 170,000.
    0:01:55 That’s how many unique drinks you can order at Starbucks.
    0:01:57 True story, I walked into a Starbucks with my ex-wife
    0:02:00 and the barista said, “We don’t recommend caffeine
    0:02:01 “for pregnant women.”
    0:02:03 And she said, “Well, I’m not pregnant.”
    0:02:05 And he said, “Well, we do have diet-free lattes.”
    0:02:20 Diet-free lattes does not make sense.
    0:02:23 Diet-free, sugar-free, fuckin’ A.
    0:02:24 I’m in the Cotswolds.
    0:02:26 Let’s skip to the manager part.
    0:02:28 I’m in the Cotswolds with my dogs.
    0:02:29 – Oh, lovely.
    0:02:32 – And we’re moving, so my job is to leave,
    0:02:35 take the dogs out to the countryside
    0:02:39 and stay in some bougie place and just be out of the way.
    0:02:40 So here I am.
    0:02:43 – Are you staying in a hotel or you got a house?
    0:02:44 What’s the deal?
    0:02:46 It looks pretty nice that way you got behind you.
    0:02:47 – It’s called Heckfield Place.
    0:02:49 And I was gonna go to Manor Estelle,
    0:02:50 but they didn’t have any room
    0:02:53 and then so a farmhouse can put up the dogs.
    0:02:55 So Heckfield’s kind of a, it’s the Lexus.
    0:02:57 – So a farmhouse has a no dogs policy?
    0:03:00 – No, only certain rooms, only certain sheds allow dogs.
    0:03:01 They all claim to be dog-friendly
    0:03:04 and they have like two room is for dogs.
    0:03:05 And I can kind of understand
    0:03:06 ’cause don’t tell anyone,
    0:03:08 my dogs have ripped up this place, Jesus Christ.
    0:03:13 But it’s, we go on long walks.
    0:03:15 We’re in the greatest countryside.
    0:03:17 I keep thinking I’m gonna run into Ellen.
    0:03:19 Supposedly Ellen lives out here
    0:03:21 with her wife, Portia de Rossi.
    0:03:25 She escaped once she got kicked out of the US basically.
    0:03:26 Isn’t the British countryside the best?
    0:03:28 It really is incredible, right?
    0:03:32 – Let me think.
    0:03:34 – Let me pour some tea first.
    0:03:38 – Gonna go with a no from you there.
    0:03:40 You just don’t really like the outdoors.
    0:03:41 I think that’s the problem.
    0:03:43 – I don’t like the UK from November to May.
    0:03:46 It’s 40 degrees and just wet.
    0:03:47 I don’t even see it rain.
    0:03:49 I just walk outside and it’s wet.
    0:03:50 I’ll give you this.
    0:03:51 When I first moved to New York,
    0:03:53 people said, oh, there’s beautiful beaches
    0:03:55 in Long Island in the Hamptons.
    0:03:56 And I thought, I’m from California.
    0:03:57 These won’t be beautiful beaches.
    0:03:58 And I went out there and found out
    0:04:00 that the beaches are beautiful.
    0:04:02 People constantly talk about the British countryside.
    0:04:03 And I thought, you know, yeah, right.
    0:04:05 And I came out here, it is beautiful.
    0:04:08 It’s just, it’s dark at 330 today.
    0:04:09 – That’s all part of the vibe.
    0:04:11 You just got to get involved with that and get on board.
    0:04:13 – No, I just wanna listen to Simon and Garfunkel
    0:04:14 and self-harm.
    0:04:15 It’s just…
    0:04:18 – That’s not the vibe.
    0:04:22 Simon and Garfunkel, get inside, have some tea.
    0:04:24 Head to bed pretty early.
    0:04:25 – Yeah.
    0:04:26 What do you been up to out here?
    0:04:26 We’re always talking about me.
    0:04:28 Let’s talk about you, but keep it short
    0:04:29 ’cause I’m not that interested.
    0:04:30 (laughing)
    0:04:32 – Well, speaking of weather,
    0:04:33 it snowed for the first time today,
    0:04:35 which is pretty exciting.
    0:04:36 So New York is getting cold.
    0:04:40 And that’s the longest short of it in New York.
    0:04:41 – Wow, are you engaging?
    0:04:43 (laughing)
    0:04:44 Here, he’s a charmer.
    0:04:45 He’s a charmer.
    0:04:47 Get to the headlines, Ed.
    0:04:48 Jesus Christ.
    0:04:49 (laughing)
    0:04:50 – That’s right.
    0:04:52 Let’s start with our weekly review of market vitals.
    0:04:54 (upbeat music)
    0:05:00 The S&P 500 rose.
    0:05:02 The dollar rose on Trump’s tower of threats,
    0:05:03 but declined at the end of the week.
    0:05:08 Bitcoin hit, wait for it, $100,000 for the first time.
    0:05:11 And the yield on tenure treasuries was volatile,
    0:05:12 shifting to the headlines.
    0:05:14 Sales force shares rose more than 10%
    0:05:16 after the company issued higher than expected guidance
    0:05:18 for the current quarter.
    0:05:22 Revenue also beat expectations up 8% from a year earlier
    0:05:24 as the company secured more than 200 deals
    0:05:28 for its AI chatbot suite called Agent Force.
    0:05:30 Meta is seeking proposals from developers
    0:05:33 to construct nuclear power plants.
    0:05:34 The initiative aims to get the plants online
    0:05:36 by the early 2030s
    0:05:39 to help power the company’s data centers.
    0:05:43 United Healthcare CEO Brian Thompson was shot and killed
    0:05:44 in what the authorities are calling
    0:05:46 a brazen, targeted attack.
    0:05:48 The incident occurred just before the company’s
    0:05:51 highly anticipated investor day in New York.
    0:05:54 I don’t really know what to make of this, Scott.
    0:05:56 We’ve never covered anything like this.
    0:06:00 I guess the first question I’d ask you is,
    0:06:04 what do you think this means for United Health?
    0:06:07 Like how is United Health supposed to respond
    0:06:08 to a crisis like this?
    0:06:11 – Well, it’s a tragedy for the family, no doubt about it.
    0:06:14 I think United’s gonna be fine.
    0:06:17 But what’s come out, which is really interesting,
    0:06:20 I found is that the etchings on the casing said,
    0:06:21 deny, defend, oppose.
    0:06:23 And this is the name of a book
    0:06:28 that’s about how insurance companies get out of claims.
    0:06:32 And so this appears to be politically motivated
    0:06:33 or thematically motivated.
    0:06:36 – What’s been shocking to me has been the response online.
    0:06:39 And to say there’s been a lack of empathy
    0:06:42 as an overstatement, people are circulating memes
    0:06:44 and acting as if, kind of quite frankly,
    0:06:46 the company and this person had it coming
    0:06:50 is the way I read some of the memes I’ve been saying.
    0:06:54 And in the US, what you have is a healthcare system
    0:06:57 that has, is essentially bankrupting a lot of people.
    0:07:00 40% of Americans have some form of debt
    0:07:03 as a function of dental or medical bills
    0:07:05 that they can’t pay off.
    0:07:08 And the largest source or largest cause of bankruptcy
    0:07:10 is medical debt.
    0:07:11 And there’s just no getting around it.
    0:07:13 The American healthcare system, in my view,
    0:07:15 is optimized for the top 10%.
    0:07:17 If you’re in the top 10%,
    0:07:19 you have the best healthcare in the world.
    0:07:21 If you’re in the bottom 90%,
    0:07:23 you have expensive but bad healthcare.
    0:07:25 When income inequality gets to the point it’s at,
    0:07:27 it usually self-corrects, but it self-corrects
    0:07:30 in a small number of ways,
    0:07:31 either through war, famine, or revolution.
    0:07:34 And I think this is an example.
    0:07:37 When you have the CEOs of companies being murdered,
    0:07:40 and it looks like it was politically motivated,
    0:07:41 it looks like it has some connection
    0:07:44 or link to the company and a viewpoint
    0:07:46 around the behavior of these types of companies,
    0:07:49 the healthcare system in the United States,
    0:07:51 in this in no way justifies violence,
    0:07:53 but it does create a lot of despair
    0:07:57 and disability in our economy.
    0:07:59 – What do you think the conversations
    0:08:01 in the boardroom are right now?
    0:08:04 Like, do you think if this is indeed
    0:08:07 politically motivated and it looks like it was,
    0:08:09 do you think the boardroom is like,
    0:08:12 okay, people are angry,
    0:08:14 we’re gonna change the way we do things?
    0:08:19 Or is the boardroom thinking we need to up our security?
    0:08:21 I mean, just some statistics here.
    0:08:25 Meta spends $23 million on protecting
    0:08:28 the personal safety of Mark Zuckerberg,
    0:08:29 and Google spends $7 million.
    0:08:32 So a lot of other companies know
    0:08:35 that people are kind of out to get their CEOs.
    0:08:37 And United Health, I don’t believe,
    0:08:42 spends any money on executive personal safety or security.
    0:08:46 So like, what do you think is the response
    0:08:49 at the board level from United Health
    0:08:51 when something like this happens?
    0:08:54 Does it actually force them to sort of take a look
    0:08:56 at their business and how they make money,
    0:08:59 or is it more like we need to do a better job
    0:09:00 of protecting our executives?
    0:09:02 – Yeah, I would imagine the first reaction is,
    0:09:04 we need to keep our executives safe.
    0:09:06 Those numbers that you quoted around CEO security
    0:09:08 are about to explode.
    0:09:09 Now it’s a good business to be in right now,
    0:09:11 offering executive security.
    0:09:14 This isn’t gonna be a moment of reflection for them.
    0:09:16 Like most for-profit companies,
    0:09:17 they do whatever they can to try
    0:09:21 and maximize their profits and rationalize.
    0:09:22 They’re like, I know, let’s get some insulin,
    0:09:23 let’s put a brand on it,
    0:09:25 and let’s quadruple the price or whatever it is.
    0:09:28 But they’re not gonna say we need to really think
    0:09:31 through healthcare in the United States.
    0:09:33 – Yeah, exactly.
    0:09:34 But that’s what everyone online
    0:09:35 seems to think is happening here,
    0:09:38 is like all those trolls that you mentioned,
    0:09:41 they’re like, oh yeah, well, someone finally showed them.
    0:09:43 – This doesn’t help the problem, it makes it worse.
    0:09:46 It makes it seem like the people who,
    0:09:48 I mean, this is just in any way,
    0:09:53 if the murder of a 50 year old man with a family
    0:09:56 is rationalized, he had a pretty serious chaos.
    0:10:00 And just the fact that these folks need security now
    0:10:03 is really disappointing.
    0:10:05 So the short-term, it’s just gonna be,
    0:10:06 those numbers are gonna go way up,
    0:10:09 you’re gonna see security across every,
    0:10:11 I gotta imagine every CEO of a health company
    0:10:14 is saying, do I need security now?
    0:10:16 Should it inspire a moment of reflection
    0:10:18 of why does everybody hate me
    0:10:20 or why are there so many people that hate me?
    0:10:22 Yeah, will that happen?
    0:10:26 No, and the guilty party here is not the CEO of this company,
    0:10:28 it’s the guilty party is the electorate
    0:10:32 who continue to let their elected representatives
    0:10:34 be weaponized by lobbyists from the pharmaceutical
    0:10:35 and the healthcare industrial complex
    0:10:38 such that they can charge more for pharmaceuticals,
    0:10:40 they can charge more for diabetes medication,
    0:10:43 they can let insurance companies,
    0:10:45 denial sorts of claims.
    0:10:48 So the US healthcare system is the most susceptible
    0:10:49 business in the history of business,
    0:10:51 it’s raised prices faster than inflation,
    0:10:54 at 17% of GDP, it used to be 5%,
    0:10:56 I think as recently as 1962.
    0:10:59 So in 60 years, it’s now almost four times
    0:11:00 the amount of our government,
    0:11:03 it’s the biggest business in the US.
    0:11:05 And we need to turn folks into consumers again
    0:11:08 where they actually look at the price and they demand more.
    0:11:10 But this is gonna,
    0:11:12 it’s gonna inspire a lot of very interesting conversations,
    0:11:13 I’ll just leave it at that.
    0:11:16 – Let’s move on to Salesforce, I think it’s now.
    0:11:19 – There we go, Salesforce, the agentic layer.
    0:11:22 They’re killing it, they’re wreaking,
    0:11:25 are getting efficiencies internally,
    0:11:28 their quarterly earnings increased 8%,
    0:11:32 which isn’t amazing, but it beat expectations
    0:11:36 and their operating margins hit their highest number ever.
    0:11:39 And current quarter guidance came in strong overall,
    0:11:42 full year guidance for revenue growth stayed the same.
    0:11:43 Is this a little bit of rah-rah?
    0:11:45 Yeah, because of demand for the agent force
    0:11:49 was really as revolutionary as Mark Benioff described it,
    0:11:51 they probably would have guided up.
    0:11:54 I mean, NVIDIA says this is revolutionary
    0:11:55 and we’re taking our guidance up,
    0:11:57 they’re like, this is amazing, it’s revolutionary,
    0:11:59 but we’re gonna, we’re maintaining guidance.
    0:12:01 – Yeah, I think the story of this earnings call was AI,
    0:12:04 they mentioned the word AI 21 times
    0:12:07 and they mentioned the word agent force 67 times.
    0:12:11 So they are very optimistic about AI.
    0:12:13 The question is whether that will actually pan out
    0:12:15 in the numbers themselves,
    0:12:18 because, you know, they talked a lot about agent force
    0:12:20 and they said that they’ve signed a lot of deals
    0:12:22 with agent force.
    0:12:24 And Salesforce only launched agent force a month ago,
    0:12:25 so we don’t know yet.
    0:12:27 So I think the thing that we’ll wanna keep an eye on
    0:12:31 over the next few quarters is whether or not agent force,
    0:12:34 this new AI bot army is hype,
    0:12:37 or if it actually is gonna have a meaningful impact
    0:12:39 on revenue, because, you know,
    0:12:42 just saying over and over again, it’s great, it’s great,
    0:12:44 it’s great, we’re so excited to deploy it,
    0:12:46 that’s just not really,
    0:12:48 that’s not really enough for Wall Street, I don’t think.
    0:12:53 – And let’s just wrap up here with Metta’s new proposal
    0:12:55 for nuclear power plants,
    0:12:57 or at least they’re seeking proposals
    0:12:59 from other development companies
    0:13:01 to construct nuclear power plants.
    0:13:03 Do you have any initial thoughts on that?
    0:13:05 – Well, it’s interesting, these companies are now
    0:13:06 kind of taking on the role of government
    0:13:08 in the sense that the only people who have the capital
    0:13:10 to build nuclear power plants,
    0:13:13 who see to be the government or a giant utility,
    0:13:16 there was government regulated and given monopoly.
    0:13:18 I mean, nuclear has just had such a terrible brand.
    0:13:20 I remember I was in fixed income at Morgan Stanley
    0:13:23 and going up to Washington for a dinner,
    0:13:25 and there was something called the Washington Public Power
    0:13:27 Supply, which was supposed to build a nuclear power plant,
    0:13:29 it overran and it ended up being just this giant hole
    0:13:31 in the ground, I’m not sure if it ever finished or not,
    0:13:34 and they used to call the bonds, whoops, bonds,
    0:13:38 and there’s just been, it’s been so out of favor,
    0:13:41 and all of a sudden it is white hot,
    0:13:45 because the friction in AI isn’t people, it isn’t customers,
    0:13:47 it’s something unusual, it’s energy to power it all,
    0:13:49 and we said in our prediction stack
    0:13:52 that nuclear would be the technology of 2025.
    0:13:53 Why nuclear?
    0:13:56 It’s reliable, efficient, carbon-free, and powerful.
    0:13:58 One nuclear plant produces as much energy
    0:14:03 as three million solar panels or 430 wind turbines,
    0:14:07 and there’s just few ways to kind of spin up
    0:14:09 in three to five years,
    0:14:12 something that could potentially power 750,000
    0:14:16 to 3 million homes, which is what AI is gonna require.
    0:14:18 Meta’s energy consumption increased 1,500%
    0:14:22 in the last 10 years, and in August,
    0:14:23 Zuckerberg said Lama IV,
    0:14:25 Meta’s next generation of their AI model
    0:14:28 will need 10 times more compute to train
    0:14:29 than the previous generation.
    0:14:31 – I think the thing that jumped out to me
    0:14:33 is the point that you made about the idea
    0:14:35 that you have meta basically taking
    0:14:38 on the role of the government at this point,
    0:14:40 because the thing that Jigar Shah told us,
    0:14:43 and this was the head of the loan office
    0:14:45 at the Department of Energy,
    0:14:48 is he said we need the government to be funding this
    0:14:51 because we’re the only ones with the capital
    0:14:54 to make these risky investments.
    0:14:56 I mean, you look at Vogel,
    0:15:00 the new big nuclear plant in Georgia that was just built,
    0:15:03 that thing cost $35 billion to build,
    0:15:07 and it went $17 billion over budget.
    0:15:10 So these things are extremely capital intensive,
    0:15:12 but to your point, it’s like,
    0:15:15 actually there is another entity
    0:15:17 that can make these forward-leading investments,
    0:15:21 and it is big tech, it’s Meta, it’s Amazon, it’s Google,
    0:15:24 it’s potentially Apple at some point,
    0:15:28 and I guess where my mind goes,
    0:15:32 it feels a little bit dystopian
    0:15:35 that we’re at a place in society
    0:15:38 where the two gatekeepers of the future
    0:15:41 of our energy industry are one,
    0:15:43 the government, and then two,
    0:15:45 like a handful of tech executives.
    0:15:47 Like the idea that Mark Zuckerberg,
    0:15:49 who originally was the guy
    0:15:51 who built a social media network,
    0:15:56 and now he’s kind of shepherding the direction
    0:15:59 of clean energy in America,
    0:16:01 which will just give him even greater,
    0:16:04 and an even tighter grip on all of the infrastructure
    0:16:07 in the US from advertising to computing power,
    0:16:10 and now to just pure raw energy.
    0:16:15 Maybe I’m being a little bit, you know, tin-hat,
    0:16:16 but it just feels like
    0:16:19 we’re going into a slightly scary place.
    0:16:21 – Well, you gotta ask yourself, what’s next?
    0:16:23 They control the news or can elect a president?
    0:16:27 You’re just figuring this out, Ed?
    0:16:28 Wait, let me get this.
    0:16:30 Your thesis is that tech executives are growing
    0:16:32 too powerful that there might be a problem here.
    0:16:35 Huh, really?
    0:16:37 It’s almost, this is the least mendacious thing
    0:16:38 that Meta’s done.
    0:16:41 I mean, if they, I don’t know if there’s a way
    0:16:43 for the government to get in the middle and say, okay,
    0:16:45 it’s like when they build a building,
    0:16:49 or a developer wants to build a skyscraper in downtown,
    0:16:50 San Francisco, they say, fine,
    0:16:52 but it’s not gonna be as big as you want,
    0:16:54 and you have to build a park,
    0:16:58 or 10% of the residences have to be for artists
    0:17:01 or whatever, for people raising allergy fee,
    0:17:03 labradoodles or whatever.
    0:17:05 I think this is a good thing.
    0:17:08 I think that AI, similar,
    0:17:10 one of the things that always bothered me about crypto
    0:17:13 is it seems like we have the self-invented
    0:17:14 incremental usage of electricity
    0:17:16 that’s equivalent to Argentina,
    0:17:19 and that it’s, I’m not sure that we really needed that,
    0:17:22 but this is gonna make that energy consumption
    0:17:24 look like a walk in the park.
    0:17:27 This, in my view, is the most exciting technology
    0:17:29 outside of GLP-1 drugs.
    0:17:31 I think it’s really exciting,
    0:17:34 and I’m glad they’re making these sorts of investments.
    0:17:36 The key is, do we need some sort of oversight
    0:17:40 to make sure they don’t begin to sequester all power
    0:17:41 to a small number of companies,
    0:17:43 and then use that as a weapon
    0:17:45 where other companies are basically
    0:17:47 dealing with brownouts every day.
    0:17:49 We’ll be right back after the break
    0:17:51 with a look at how Amazon might start competing
    0:17:53 with Nvidia.
    0:17:54 If you’re enjoying the show so far,
    0:17:57 hit follow and leave us a review on Proficy Markets.
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    0:21:05 – We’re back with ProfG Markets.
    0:21:08 Amazon is building an AI supercomputer
    0:21:10 known as an ultra-cluster that will be powered
    0:21:12 by hundreds of thousands of its own
    0:21:14 Tranium 2 semiconductors.
    0:21:17 The chip cluster will quintuple the processing power
    0:21:20 for AI startup Anthropic, which recently received
    0:21:23 an additional $4 billion investment from Amazon.
    0:21:25 And when the cluster goes live next year,
    0:21:28 it will be one of the largest AI training clusters
    0:21:29 in the world.
    0:21:33 So Scott, I think the most important thing here
    0:21:35 is the fact that Amazon is deciding
    0:21:38 to build a giant supercomputer, not with Nvidia chips,
    0:21:42 but with its own chips, these Tranium 2 chips.
    0:21:44 Your thoughts on this news?
    0:21:47 – I was really, well, one, you know,
    0:21:51 I haven’t participated in the kind of the Bitcoin explosion
    0:21:54 and I haven’t really participated in the AI explosion.
    0:21:56 And I was happy to see this because I own Amazon stock
    0:21:59 and I just thought this was brilliant and really exciting.
    0:22:02 And I love the idea of Nvidia having a competitor.
    0:22:05 I wish it was a smaller company,
    0:22:08 but it reminds me that some kid or some PhD student,
    0:22:12 near too young to remember this 10 or 20 years ago,
    0:22:14 strung together a bunch of Nintendo game sets
    0:22:17 or game consoles and created like a supercomputer
    0:22:19 just stringing these things all together.
    0:22:21 And this architecture just seems really fascinating.
    0:22:24 And as you said, if they can in any way,
    0:22:29 in any way, somehow create a credible competitor
    0:22:34 around their chips, even in the same universe as Nvidia,
    0:22:37 just their operational excellence, their B2B,
    0:22:41 their cloud offering, you gotta think they’re gonna take
    0:22:44 a trillion dollars of market cap away from Nvidia.
    0:22:47 So I thought, wow, this is really exciting
    0:22:51 for Amazon shareholders and they’re kind of offering
    0:22:55 cost reduction and control by reducing reliance on Nvidia.
    0:22:57 Amazon can now lower AI infrastructure costs
    0:22:59 for its business customers while gaining greater control
    0:23:01 over its supply chain.
    0:23:03 I mean, this is, I just thought this was,
    0:23:07 you know, whenever you get a company that comes out of nowhere
    0:23:09 and becomes the most valuable company in the world,
    0:23:13 it’s just imagine, you know, Lake Erie of Blood
    0:23:16 being poured into the water and the megalodons that attracts.
    0:23:18 And this is attracted one of the scariest megalodons
    0:23:21 in the history of business and that is Amazon.
    0:23:23 And they have the money to do this.
    0:23:26 The firm’s most recent $4 billion investment in Anthropic
    0:23:27 included an agreement that Anthropic
    0:23:29 would use Amazon’s AI chips.
    0:23:34 So the number two in LLMs is about to use Amazon chips,
    0:23:37 which will train the chips, they’ll get better on it.
    0:23:40 Nvidia stock fell 3%, but that’s not that big a deal.
    0:23:43 And just wanna add on here,
    0:23:46 Amazon is already trading at a pretty rich valuation,
    0:23:48 but it’s potentially gonna get some of that Nvidia
    0:23:50 or that GPU magic.
    0:23:54 We did a predictions podcast on Pivot
    0:23:56 and we asked Anthony Scaramucci, our friend,
    0:23:58 to come up with a prediction.
    0:23:59 And his big prediction is that he thinks
    0:24:03 that IBM is gonna explode because IBM actually has some
    0:24:05 really strong IP and scientists around AI
    0:24:10 that effectively Watson was the first kind of AI offering.
    0:24:11 And then he thinks with their CEO
    0:24:14 and their current offering that this stock is gonna explode.
    0:24:16 And I thought, wow, that’s a really interesting take.
    0:24:18 But it’d be interesting to see what companies
    0:24:21 are able to draft off of or kind of become remora fish
    0:24:23 on Nvidia and open AI success.
    0:24:25 But I just thought this was genius.
    0:24:27 I mean, you gotta give it to the folks in Amazon.
    0:24:29 This is, I feel like this is a master stroke.
    0:24:33 – Yeah, it’s also just like the perfect marketing message too.
    0:24:37 Because, I mean, when you think about standard marketing,
    0:24:40 the standard play is that you go out in public
    0:24:42 and you’ll just like say out loud or you’ll advertise
    0:24:45 like we have the best chips in the world.
    0:24:47 Or maybe you’ll like have some research report
    0:24:50 that says, you know, our chips are, you know,
    0:24:52 5% faster than Nvidia’s or whatever.
    0:24:55 And that’s what we’ve been seeing most of these chip maker
    0:24:57 competitors doing right now.
    0:24:59 You just sort of make a statement about your chip.
    0:25:01 Ours is more efficient, it’s cheaper, it’s faster,
    0:25:04 whatever, then you just hope that the market believes you.
    0:25:07 But this is so much more compelling.
    0:25:09 Because to go out and build a supercomputer
    0:25:13 that is this big and this expensive
    0:25:17 with only your own chips, not with Nvidia’s,
    0:25:20 implicit in that investment is a belief
    0:25:22 that your chips are better than Nvidia’s.
    0:25:26 Like it’s the perfect show don’t tell strategy,
    0:25:29 which I find so much more compelling.
    0:25:31 And I would also assume that the market
    0:25:33 is gonna find this a lot more compelling,
    0:25:36 especially, you know, the AI companies
    0:25:38 who want to use these chips.
    0:25:41 And that’s sort of the most important thing here.
    0:25:42 So we’ve been talking a lot about
    0:25:44 all of these different chip makers.
    0:25:47 We talked about Cerebrus who came out and said,
    0:25:50 you know, we have the biggest chips in the world
    0:25:52 and therefore ours are the best.
    0:25:54 And I didn’t really buy it.
    0:25:57 And this thing, I’m suddenly like, okay,
    0:26:00 this is really gonna shake things up for the first time
    0:26:05 in a market where Nvidia has 95% market dominance.
    0:26:08 It feels like Amazon could be the first one
    0:26:09 to actually disrupt this.
    0:26:12 – Well, see above the biggest Megalodon’s
    0:26:13 great white sharks in the world
    0:26:15 are coming for that 95% market share.
    0:26:17 Google, Microsoft, Meta and Apple
    0:26:19 are all developing custom AI chips
    0:26:22 to reduce their dependence on the market leader.
    0:26:24 And then there’s just a suite of AI startups
    0:26:26 looking to get a piece of the pie.
    0:26:30 You mentioned Cerebrus, there’s Grock, Accelera
    0:26:34 and Tensterent, which recently raised nearly 700 million
    0:26:36 of new funding from investors, including Bezos.
    0:26:41 So there’s a three and a half trillion dollar carcass
    0:26:44 that everybody wants a piece of and that’s Nvidia.
    0:26:45 – There’s also just this one quote
    0:26:48 from the chief executive of AWS,
    0:26:50 which I find so compelling
    0:26:52 because it’s so understated and so simple
    0:26:55 compared to all of the other marketing messages
    0:26:56 of these other chip startups.
    0:27:00 He said, quote, today there’s really only one choice
    0:27:02 on the GPU side.
    0:27:04 And we think customers would appreciate
    0:27:06 having multiple choices.
    0:27:07 That was the statement.
    0:27:10 It’s just so simple and so compelling.
    0:27:10 – Yeah, there you go.
    0:27:13 And kudos to them.
    0:27:15 Kudos to them, they’re out first, right?
    0:27:15 – Yeah, exactly.
    0:27:18 But you mentioned some of those other companies
    0:27:20 that are building.
    0:27:23 So you talked about Google,
    0:27:25 they’re working on their, what’s known as their
    0:27:28 Tenster processing units.
    0:27:30 Microsoft is working with open AI on chips.
    0:27:33 Meta is working on a chip called Ultimus.
    0:27:38 These companies are all not dipping their toes,
    0:27:42 but maybe dipping their ankles into chip making.
    0:27:46 But the wrinkle is that they all still
    0:27:49 have big partnerships with Nvidia.
    0:27:52 Like they all still heavily rely on Nvidia.
    0:27:54 And so we’re getting to this point now
    0:27:58 where they’re all working with Nvidia because they have to.
    0:28:01 But on the side, they’re starting to build out
    0:28:03 their own businesses because they all recognize
    0:28:06 well, we rely on Nvidia too much.
    0:28:08 So I would be interested to get your perspective
    0:28:11 on how is that all going to play out?
    0:28:13 And have you ever seen a dynamic before
    0:28:17 where sort of your friends with the big company,
    0:28:19 but then you start trying to nip it their heels
    0:28:21 and ultimately you’re trying to compete with them?
    0:28:22 – Yeah, it was a similar dynamic back in,
    0:28:24 I think in the 90s.
    0:28:27 I think Apple got sick of being so reliant on Intel
    0:28:29 and they started developing their own chips.
    0:28:32 So yeah, you have seen this before.
    0:28:34 Nvidia clearly doesn’t have the power
    0:28:36 that they’d be worried about antitrust concern.
    0:28:37 If Nvidia wanted to play hardball, they’d say,
    0:28:39 well, if you’re in the business of building your own chips,
    0:28:40 we’re out.
    0:28:42 I think that would probably create antitrust scrutiny
    0:28:44 given their dominance in the market.
    0:28:48 So all of these guys, every year,
    0:28:50 they spend more and more money on Nvidia.
    0:28:51 They’re waiting in line.
    0:28:53 They’re price takers.
    0:28:54 These folks are not used to being price takers.
    0:28:57 These folks are the biggest,
    0:29:00 they’re the biggest gorilla in the room.
    0:29:01 And when they meet with their vendors,
    0:29:02 they’re used to saying,
    0:29:05 no, I want you to cut your prices by 10% this year
    0:29:06 and I need it faster
    0:29:08 and I’m gonna delay my payment terms.
    0:29:10 They’re used to dictating terms.
    0:29:11 And so when a company shows up
    0:29:13 and starts dictating terms to them,
    0:29:16 they’re just not used to it.
    0:29:19 They can’t imagine what world they’re in all of a sudden.
    0:29:22 So I go, wait, all of a sudden I’m not the hot girl
    0:29:24 at the party and I have to kiss your ass
    0:29:27 and you’re ignoring my texts.
    0:29:27 I mean, it’s just,
    0:29:32 this is an alien place for these guys.
    0:29:33 – We’ll be right back after the break
    0:29:36 with a look at an interesting new take on product launches
    0:29:37 from Open AI.
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    0:30:07 and how do they find their next great idea?
    0:30:10 Invest 30 minutes in an episode today.
    0:30:12 Subscribe wherever you get your podcasts.
    0:30:15 Published by Capital Client Group, Inc.
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    0:30:46 Q, got this.
    0:30:51 Learn what Amazon Q Business can do for you at aws.com/learn.
    0:30:56 That’s aws.com/learnmore.
    0:31:01 – Support for the show comes from Alex Partners.
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    0:32:16 – We’re back with Proficy Markets.
    0:32:18 OpenAI has unveiled a new initiative for December
    0:32:21 called 12 Days of OpenAI,
    0:32:22 where it’ll showcase upcoming products
    0:32:24 through live streams held on its website
    0:32:26 across those 12 days.
    0:32:28 The event has already gained traction
    0:32:30 with the company’s tweet about the initiative
    0:32:33 racking up 2.6 million views and attracting coverage
    0:32:37 from more than 10 different media outlets.
    0:32:41 Scott, we’ve been talking a lot about public relations
    0:32:44 and investor relations and how that’s all changing this year.
    0:32:48 What’s your take on OpenAI’s strategy here,
    0:32:50 specifically the fact that they are deciding
    0:32:52 to go into live streaming?
    0:32:55 – Yeah, so first off, I hear the term 12 Days of OpenAI
    0:32:57 and I wanna like go into the garage,
    0:32:59 close the door, turn on the car.
    0:33:02 I mean, 12 Days of OpenAI.
    0:33:04 It’s like, okay, couldn’t they have gone
    0:33:05 with like three days of open?
    0:33:09 I mean, so two weeks of this shit.
    0:33:11 Anyways, you’ve been talking a lot about this
    0:33:14 and how the earnings call needed to be disrupted
    0:33:16 for investor relations.
    0:33:17 And whether I think it was Alexander Karp
    0:33:21 walking around live stream, Instagram,
    0:33:23 going direct to kind of retail investors.
    0:33:24 There’s a ton of innovation
    0:33:26 around investor communications right now.
    0:33:28 And this isn’t investor communications
    0:33:30 as much as it is a product launch.
    0:33:33 And Apple sort of redefined the tech product launch
    0:33:37 and they literally ripped off fashion brands.
    0:33:39 They said, all right, highly curated,
    0:33:43 highly orchestrated, lighting, celebrities, big reveal.
    0:33:45 And instead of having Giselle Boonchen come down the aisle,
    0:33:48 we have Steve Jobs, he has a uniform.
    0:33:50 I mean, the lighting, the production value
    0:33:52 is capturing a perfect moment in time.
    0:33:56 And it’s now moved to, they’ve kind of zagged
    0:33:58 to their zig and that they want it to be more authentic.
    0:34:00 I’m sure they rehearsed, but they want it to feel raw
    0:34:02 and they want it to feel genuine.
    0:34:05 And bottom line is this is a prediction.
    0:34:08 I bet more people watch this product launch
    0:34:11 than watch CNN during those days.
    0:34:13 This will get, this will get more viewership
    0:34:17 from a more valuable audience than any cable network.
    0:34:20 Maybe not Fox, ’cause Fox still gets a lot of people.
    0:34:21 There’s a lot of people when oxygen takes,
    0:34:24 saying, ah, she’s a looker.
    0:34:28 I love that bread bear.
    0:34:30 I’d like to grab a steak.
    0:34:33 He reminds me of a guy I served a nom with.
    0:34:37 Anyways, what was going with that?
    0:34:40 I think this is gonna be hugely popular
    0:34:43 and redefine product releases.
    0:34:45 – And I think the main takeaway for me
    0:34:48 is that I think that companies
    0:34:49 should be thinking about their earnings
    0:34:54 and their product launches less as just press releases
    0:34:58 and announcements, but more as content.
    0:34:59 Like ultimately, that’s what you’re trying to do.
    0:35:00 You’re trying to produce content
    0:35:02 in the same way that we’re trying to produce content
    0:35:05 on this podcast that is engaging
    0:35:07 and that gets people excited
    0:35:09 and that gets people interested.
    0:35:11 And you’re not gonna do that
    0:35:13 with just a simple press release.
    0:35:15 The way you’re gonna do that is with videos
    0:35:17 and with podcasts.
    0:35:19 And I think it’s just very impressive
    0:35:22 that OpenAI has really led this transformation here.
    0:35:25 And they said, well, why don’t we do a live stream?
    0:35:27 I mean, that’s sort of at the forefront
    0:35:30 of the transformation of content right now.
    0:35:34 So I’m very impressed by the fact
    0:35:39 that they’re taking this route for a product launch.
    0:35:40 I would like to just get your thoughts
    0:35:43 on live streaming as a medium,
    0:35:46 which I’m just finding very fascinating right now.
    0:35:50 Like I feel like live streaming was not very long ago
    0:35:51 with this very niche concept,
    0:35:54 this very niche kind of weird corner of the internet.
    0:35:57 The idea of a live streamer was not something
    0:36:00 that held much cultural currency at all.
    0:36:04 But in the past year, we’ve seen like an explosion
    0:36:06 of live stream, live streamers and live streamers.
    0:36:09 I mean, we’ve seen like Aidan Ross,
    0:36:10 who is a big live streamer
    0:36:13 who ended up interviewing Donald Trump
    0:36:15 before he was elected.
    0:36:16 And now Aidan Ross is all over the news.
    0:36:18 And we’ve seen Kai Senat,
    0:36:21 who has built this gigantic following on Twitch.
    0:36:25 His last live stream reached 50 million viewers,
    0:36:29 which is around 15% of the United States population.
    0:36:31 And then here’s this one stat that blew me away.
    0:36:34 More than a quarter of internet users today
    0:36:37 watch a live stream every week.
    0:36:40 So I would like to just get your take
    0:36:44 on live streaming as a medium.
    0:36:47 Why do you think we’re seeing this explosion right now
    0:36:48 in media?
    0:36:49 – The other thing I don’t know,
    0:36:51 I kind of feel like live streaming
    0:36:53 is to original scripted television or video
    0:36:56 or just streaming what podcasting is to radio.
    0:36:58 And that is initially out of the gates.
    0:37:00 An old guy like me says, what’s the difference?
    0:37:02 It’s just radio, no podcasting is different.
    0:37:05 Live streaming, I feel as if, I hear this and think,
    0:37:06 okay, we should do a live stream, right?
    0:37:08 Like everybody else, but I’m sure it’s hard.
    0:37:11 – I mean, you did a live stream like last week, right?
    0:37:12 You did it on section.
    0:37:13 – Actually, I did it earlier today.
    0:37:16 I’m just not thinking correctly.
    0:37:18 I did a live stream in AMA for a section.
    0:37:23 Yeah, look, it’s been around a while.
    0:37:26 I guess celebs, I don’t know what the,
    0:37:28 I guess live streaming is going B to C
    0:37:30 where it’s mostly been B to B.
    0:37:33 You know, section, we did a live stream on AI ROI.
    0:37:35 What a name!
    0:37:36 And 10,000 people registered
    0:37:40 and I think 3,500 showed up, but that’s a good audience.
    0:37:43 I guess when you have Robert Downey Jr. or Terry Crew show up,
    0:37:45 I’d be kind of curious to understand
    0:37:48 what is the zeitgeist, what’s working, what isn’t.
    0:37:50 But it just feels like a,
    0:37:52 again, it’s all kind of the same thing.
    0:37:55 And that is if you’re walls and AOC
    0:37:57 and you go on a live stream,
    0:37:59 you’re basically going direct to consumer
    0:38:00 and you’re cutting out the means of production.
    0:38:05 And the means of production is CNBC or Fox or CNN.
    0:38:07 And so you can do it much more inexpensively.
    0:38:09 You get to dictate the terms of it.
    0:38:14 Any economic rewards, you get to read the majority of it.
    0:38:16 So it just feels like it’s another collapse
    0:38:18 of the media industrial complex
    0:38:20 where the creators get to garner more of the rewards
    0:38:21 because it’s taking advantage of the infrastructure
    0:38:23 called DARPA and the internet,
    0:38:26 as opposed to trying to kiss the ass
    0:38:28 of some means of production that gets in the middle,
    0:38:31 whether it’s Netflix, whether it’s CNBC,
    0:38:33 whether it’s Comcast, whether it’s Disney,
    0:38:35 and you can just go straight to these folks.
    0:38:38 And so it strikes me as if it’s gonna follow
    0:38:41 the arc of podcasting, it’s gonna grow substantially.
    0:38:43 It felt like it had a moment a few years ago with gaming
    0:38:44 and then it kind of went quiet again
    0:38:46 and now it feels like it’s coming back.
    0:38:48 – Yeah, it’s something that I would add onto that,
    0:38:51 that I’ve been thinking a lot about recently in content.
    0:38:54 As I’ve said to you before,
    0:38:56 I’ve just become fascinated with YouTube.
    0:39:00 And I look at what’s happening with our YouTube channel
    0:39:02 which is growing enormously.
    0:39:05 I mean, we’re getting like hundreds of thousands of views
    0:39:06 on our videos now.
    0:39:08 And I’ve been sort of wondering why is that?
    0:39:13 Like why would you opt to watch this podcast on YouTube
    0:39:16 versus just listen to it in your headphones?
    0:39:20 And I don’t think it’s because people want to see our faces,
    0:39:22 I don’t think that adds that much to it.
    0:39:23 So I was thinking about this.
    0:39:27 I think the big differentiator with YouTube
    0:39:29 and with live streaming is the comment section.
    0:39:33 I feel like having a comment section
    0:39:36 is just an entirely different experience
    0:39:39 because you get to share your own opinions.
    0:39:42 You get to hear what other people think.
    0:39:45 And suddenly the experience transforms
    0:39:47 from not just consumption,
    0:39:51 but it actually becomes like a social experience.
    0:39:54 And so what I’m finding with live streams right now,
    0:39:57 my take is it feels like live streaming
    0:39:59 is the comment section on steroids.
    0:40:03 Like you’re getting to participate in the content
    0:40:06 with a group of people who are watching it at the same time.
    0:40:10 And I’m starting to think that any form of content
    0:40:15 that doesn’t figure out a way to interact with the audience
    0:40:19 in a meaningful way where the audience can comment
    0:40:23 and have an opinion and engage interactively.
    0:40:26 I’m starting to think that any of that content
    0:40:27 is really just behind the ball.
    0:40:28 – It’s such an interesting point.
    0:40:30 You just inspired an analogy,
    0:40:31 and I don’t know if it’s the correct one,
    0:40:34 but the reason you go to Premier League games,
    0:40:36 during COVID they didn’t have fans
    0:40:38 or they had a limited number of fans.
    0:40:41 And they’re just, you watch on TV and it’s the same players
    0:40:42 and it’s the same rules in the same game.
    0:40:47 And it just fell flat without the fans in the stadium.
    0:40:50 And I wonder if this is effectively a game,
    0:40:52 traditional video now is a game where there’s no fans.
    0:40:57 And that is when I was on this AI ROI live stream,
    0:40:59 I occasionally would stop and read a comment.
    0:41:01 And we tried to interact with the audience
    0:41:03 and it just had such a nice vibe.
    0:41:06 And the thing I love about Premier League is you go
    0:41:07 and the fans are just amazing.
    0:41:10 It creates such, they’re so engaged in everything,
    0:41:13 you know, screaming and booing at every little thing
    0:41:18 and, you know, making fun of people and they’re hilarious.
    0:41:21 But to your point, maybe that’s what this is.
    0:41:23 Maybe the next level of kind of interaction
    0:41:26 and dope and entertainment is, all right, you have two streams.
    0:41:28 One stream is the content.
    0:41:32 And the second stream is the fan reaction to the content.
    0:41:34 Because what I noticed myself doing today
    0:41:36 on this live stream was occasionally
    0:41:38 when someone put something really interesting or funny
    0:41:40 or asked a question in the chat,
    0:41:42 I would sort of selectively pull stuff out and highlight it.
    0:41:45 – And think how fun that is for the viewer.
    0:41:48 I mean, it brings on a whole different dimension,
    0:41:50 the idea that you’re watching the content
    0:41:52 and the guy you’re watching is actually interacting
    0:41:54 with you in real time.
    0:41:57 You compare that to just watching like Jimmy Fallon
    0:42:01 where they have these like very kind of awkward interviews
    0:42:04 and it sort of feels like you’re watching like robots
    0:42:05 put on a production.
    0:42:08 It’s a completely, it’s so much more human, I guess.
    0:42:10 – Yeah, I think that’s a really interesting point.
    0:42:12 It’s sort of, you know,
    0:42:14 this company I’m on the board of right now, OpenWeb,
    0:42:16 manages the comments section of media companies,
    0:42:18 but comments are asynchronous.
    0:42:21 Someone posts a comment and people comment on the comment,
    0:42:23 but it creates a lot more engagement
    0:42:27 and which creates incremental opportunity for advertising.
    0:42:32 This is, all right, if we engage the audience,
    0:42:33 it’s like the players yelling back
    0:42:35 or kicking the ball in an audience member, right?
    0:42:38 It’s sort of, yeah, or you know,
    0:42:41 when the dad in left field catches the ball
    0:42:43 while holding his kid, right?
    0:42:45 It just sort of engages the whole audience.
    0:42:46 I think it’s really neat.
    0:42:48 I think we should announce now
    0:42:49 that we’re going to do a live stream
    0:42:52 so people can see you live,
    0:42:56 see how the edit really does impact our ability
    0:42:57 to make you sound intelligent.
    0:43:03 – Yeah, I don’t know if we’re cut out for live stream.
    0:43:06 – No, we’ve got faces for podcasting
    0:43:08 and content for asynchronous.
    0:43:10 – Yeah, but it is very interesting
    0:43:13 that we’re seeing companies start to embrace this.
    0:43:17 And I think it’s all headed in one direction,
    0:43:19 which is that the press release is dead
    0:43:23 and newer forms of media, like videos,
    0:43:26 TikToks, live streams, that is the future.
    0:43:28 That is the future of public relations.
    0:43:34 This episode was produced by Claire Miller
    0:43:36 and engineered by Benjamin Spencer.
    0:43:37 Our associate producer is Alison Weiss.
    0:43:39 Mia Silverio is our research lead.
    0:43:41 Jessica Lange is our research associate.
    0:43:42 Drew Burroughs is our technical director.
    0:43:45 And Katherine Dillon is our executive producer.
    0:43:46 Thank you for listening to Prof2Markets
    0:43:48 from the Vox Media Podcast Network.
    0:43:50 Join us on Thursday for our conversation
    0:43:52 with Tom Lee only on Prof2Markets.
    0:44:00 ♪ Lifetimes ♪
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    0:44:56 from medieval falconry to volcanic wine tasting.
    0:44:58 “Autograph Collection” is part of the Marriott Bonvoy
    0:45:03 portfolio of over 30 hotel brands around the world.
    0:45:06 Find the unforgettable at autographcollection.com.
    0:45:10 – Support for this show comes from Polestar.
    0:45:12 Polestar is an electric performance car brand
    0:45:14 that is focused on innovation
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    0:45:19 And their all-electric SUV, Polestar 3,
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    Scott and Ed open the show by discussing Saleforce’s earnings, Meta’s venture into nuclear energy, and the killing of UnitedHealthcare CEO Brian Thompson. Then Scott breaks down Amazon’s decision to build a supercomputer, explaining why it’s a win for shareholders and a potential game-changer for reducing AI infrastructure costs. Ed explains why he thinks Amazon could be one of the first companies to truly disrupt the semiconductor market. Finally, they discuss OpenAI’s decision to go into livestreaming and explain what its surge in popularity could mean for the future of content creation. 

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  • No Mercy / No Malice: Media Consolidation

    AI transcript
    0:00:02 Support for this show comes from Seven Rooms.
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    0:01:18 ConstantContact.ca
    0:01:26 Amazon Q Business is the generative A.I. assistant from AWS
    0:01:29 because business can be slow, like wading through the mud.
    0:01:34 But Amazon Q helps streamline work,
    0:01:38 so tests like summarizing monthly results can be done in no time.
    0:01:44 Learn what Amazon Q Business can do for you at aws.com/learnmore.
    0:01:48 That’s aws.com/learnmore.
    0:01:55 I’m Sky Galloway, and this is No Mercy, No Malice.
    0:02:00 Digital is the apex predator, legacy media is the prey.
    0:02:03 There are still lots of sheep.
    0:02:07 Media consolidation, as read by George Hahn.
    0:02:16 The hottest product in tech is Blue Sky,
    0:02:20 adding one million users a day since the election.
    0:02:24 CEO Jay Graber says the platform will never have ads,
    0:02:28 as ads are the road to “ensidification.”
    0:02:30 Okay, then.
    0:02:33 Ad-supported media as a whole is one of the least volatile businesses
    0:02:38 over the last century, accounting for 1.5% of GDP
    0:02:41 and rarely straying from that number.
    0:02:46 Inside the sector, things are less tranquil, i.e., more chaotic.
    0:02:51 In an attention economy, money follows eyeballs.
    0:02:54 I believe we’ll see ads on Blue Sky eventually,
    0:03:00 but for now, let’s talk about consolidation in the broader sector.
    0:03:05 Stories about Burmese pythons litter the local news in Florida.
    0:03:09 These snakes get big, really big.
    0:03:12 The serpents can grow to as much as 16 feet long
    0:03:15 and weigh hundreds of pounds.
    0:03:20 This presents a problem, as most owners are 5’9″
    0:03:25 and soon discover their roommate situation is unworkable.
    0:03:27 Owners release the snakes into the Everglades,
    0:03:30 where they begin taking down alligators and deer.
    0:03:36 An alien species to the ecosystem of swamps, marshes, and mangrove forests,
    0:03:40 they’ve established themselves as the apex predator,
    0:03:44 and their population has exploded.
    0:03:47 The threat to Florida’s ecosystem is so great
    0:03:51 that mitigation efforts include employing full-time snake hunters
    0:03:55 and organizing state-sponsored hunting competitions.
    0:04:02 The winner of one competition earned $10,000 for nabbing 28 pythons.
    0:04:08 A drop in the bucket against a species that lays 30+ eggs at a time
    0:04:11 and can reproduce asexually.
    0:04:16 After three decades, the U.S. Geological Survey concluded in 2023
    0:04:19 that the python is winning.
    0:04:25 Unlike the classic apex predator, which evolves alongside its prey,
    0:04:30 a non-native apex predator arrives with such disruptive force
    0:04:36 that instead of dominating an ecosystem, they transform it.
    0:04:42 Legacy media looks like Florida 30 years after the arrival of the Burmese python.
    0:04:47 A non-native apex predator, digital, is out hunting
    0:04:54 and out reproducing the previous apex predator, legacy media.
    0:05:00 Digitization lowers the barrier to entry, giving everyone access to everything.
    0:05:03 Initially, this looks like competition with extra protein,
    0:05:08 but over time, it becomes consolidation on steroids,
    0:05:12 as digital ecosystems are winner-take-most or all
    0:05:17 based on who establishes leadership and access to the cheapest capital.
    0:05:22 Amazon registers 37% of e-commerce in the U.S.
    0:05:27 while its nine closest competitors, Walmart, Apple, Target, etc.,
    0:05:31 account for 23% combined.
    0:05:37 Nearly two-thirds of the world’s social media ads are sequestered to meta.
    0:05:43 Since 2014, 90-plus percent of internet searches are done on Google.
    0:05:47 The second most popular search engine, Microsoft’s Bing,
    0:05:52 commands less than 4% of the global search market.
    0:05:56 Three companies, Match Group, Bumble, and eHarmony,
    0:06:00 control the entire digital dating marketplace.
    0:06:03 There is also consolidation on the customer end,
    0:06:10 where 10% of men get 80% to 90% of the dating opportunities.
    0:06:17 In my industry, podcasting, the concentration is extreme even by digital standards.
    0:06:21 Of the 600,000 podcasts that produce content each week,
    0:06:25 the top 10 capture half the revenue.
    0:06:31 Put another way, to build a business in podcasting that pays people well
    0:06:35 and retains talent with high opportunity costs,
    0:06:41 you likely need to be in the top 0.1% by listenership.
    0:06:43 As a member of UCLA’s crew team,
    0:06:51 I was 3.5 times more likely to be an Olympian than a successful podcast host.
    0:06:57 In the late 1990s, a wave of internet startups introduced a non-native Apex predator
    0:07:02 called streaming into the television media ecosystem.
    0:07:05 30 years later, most of those startups are dead,
    0:07:10 but their species has transformed the ecosystem such that streamers
    0:07:15 are the hunters and legacy media, the prey.
    0:07:18 To paraphrase what Ernest Hemingway said about bankruptcy,
    0:07:24 legacy media consolidated gradually, then suddenly.
    0:07:26 Here’s the gradual part.
    0:07:29 Over the past four decades, we’ve gone from an ecosystem
    0:07:37 where the number of companies controlling 90% of American media has gone from 50 to 6.
    0:07:44 Deregulation, financialization, and lax antitrust enforcement incentivize consolidation,
    0:07:49 but the shift from analog to digital made it a necessity,
    0:07:54 with the legacy media companies bulking up to keep from being devoured by digital.
    0:07:58 The sudden part happened last month,
    0:08:02 when Comcast announced it would spin off its cable assets,
    0:08:10 USA, CNBC, MSNBC, and E, along with digital properties such as Rotten Tomatoes and Fandango,
    0:08:15 into a holding company called Spinco.
    0:08:22 My first serious relationship in NYC was with a wonderful woman who suffered from bipolar disorder.
    0:08:24 We broke up for a simple reason.
    0:08:29 I did not know who I was going to wake up next to in the morning.
    0:08:37 When a company has a profitable but declining business, cable, and a growth business, streaming,
    0:08:40 investors don’t know who they’re living with.
    0:08:43 They don’t know how to value the asset,
    0:08:49 so they assign the multiple of its worst business to the entire company.
    0:08:55 The divestiture of assets in different life cycle stages provides more clarity to investors
    0:09:00 and ultimately creates a smaller hole that’s greater than the sum of its parts.
    0:09:07 The Spinco cable assets generate about $7 billion per year in revenue.
    0:09:19 Meanwhile, Peacock, Comcast’s streaming service, reduced its losses from $565 million to $436 million year over year.
    0:09:29 But more important for a growth asset, its revenue increased 82% year over year to $1.5 billion.
    0:09:32 I predicted Spinco a year ago.
    0:09:34 I’ll make another prediction now.
    0:09:39 Spinco will become a vehicle for acquiring other cable assets.
    0:09:43 Warner Brothers Discovery and Paramount are likely sellers,
    0:09:48 as both have profitable streaming units that are weighed down by legacy assets.
    0:09:56 When Max swung from a loss of $1.6 billion to a profit of $103 million year over year,
    0:10:01 Warner Brothers Discovery saw its stock fall 12%.
    0:10:12 Paramount Plus turned a $49 million profit in Q3, but Paramount’s market cap is down 19% this year.
    0:10:19 Disney, the only legacy player to see its stock increase after its streamer reached profitability,
    0:10:24 says it’s not selling its linear assets, ABC, FX, ESPN, etc.,
    0:10:29 as those networks are deeply integrated into Disney Plus.
    0:10:33 Interestingly, all three companies are betting on bundling strategies,
    0:10:40 i.e. consolidating cable content in one app without the cable infrastructure.
    0:10:47 Netflix, the non-native Apex predator, says it’s strong enough to hunt solo.
    0:10:53 I think Bob Iger is either wrong or he’s playing poker and holding out for a better price.
    0:11:00 If Disney sold its cable assets for $1, I believe it would be worth more within a year,
    0:11:05 as it would offer a cleaner story regarding streaming, movies, and the parks,
    0:11:13 versus Bob apologizing every quarter for ABC and ESPN’s lackluster performance.
    0:11:18 The second best investment I ever made was in a Yellow Pages company.
    0:11:23 At the time, these assets were declining at 7% to 12% per year,
    0:11:27 but they were still throwing off a lot of cash flow.
    0:11:34 We acquired one Yellow Pages company after another on this basic thesis.
    0:11:37 Together, we can survive, even prosper.
    0:11:40 Alone, we’re all dead.
    0:11:42 Our strategy was simple.
    0:11:48 Cut costs faster than revenue declined by retaining the top 10% of salespeople,
    0:11:53 closing headquarters, and laying off nearly everyone at HQ.
    0:12:01 That we were able to pick up these assets on the cheap meant that every year we increased cash flow.
    0:12:08 Coda, ultimately, the company returned to growth as a customer relationship management firm.
    0:12:14 Distressed assets can be great businesses, as they can be bought on sale,
    0:12:19 and typically don’t go away as quickly as people believe they will.
    0:12:23 The median age of an MTV viewer is 50 years old.
    0:12:28 The median age of an MSNBC viewer is 70 years old.
    0:12:32 These aren’t attractive demos for advertisers,
    0:12:37 but those audiences are likely to continue tuning in for the rest of their lives.
    0:12:44 As long as ownership stops trying to inject Botox and filler into a senior to make it look young again,
    0:12:54 they can generate increasing cash flows with linear assets by cutting costs faster than the rate of decline via consolidation.
    0:12:59 In television, the platform has always been bigger than the talent.
    0:13:05 In podcasting and the creator economy, it’s the converse.
    0:13:09 Net neutrality protects the little guy from getting muscled out on distribution,
    0:13:14 as the distribution is accessible and free to everyone.
    0:13:16 The means of production are relatively cheap.
    0:13:19 My podcasting kit costs around $1,000.
    0:13:24 A decent TV studio can run over $400,000.
    0:13:28 There is little sustainable enterprise value in a podcast company.
    0:13:33 What matters isn’t CAPEX or infrastructure, it’s talent.
    0:13:37 That’s why a small number of individual podcasters are getting rich,
    0:13:41 but not a lot of podcast company shareholders.
    0:13:44 Podcasters command a greater share of revenue,
    0:13:48 and their orders of magnitude more efficient than TV studios,
    0:13:52 resulting in better pricing for advertisers.
    0:14:02 A cable news anchor recently told me he expected his compensation to decrease 80% with his next contract.
    0:14:11 He isn’t Rachel Maddow, though her new contract at MSNBC reportedly will pay her $5 million less per year.
    0:14:16 Puck calls this “the great TV news comp depression.”
    0:14:19 But it isn’t just cable news.
    0:14:23 I recently had lunch with an Oscar-nominated movie star, Flex,
    0:14:30 who told me he’d worked for scale, i.e. the guild minimum, on his last few films.
    0:14:35 On the scripted television side, where salaries historically increased with each new season,
    0:14:39 networks are cutting pay to keep shows afloat.
    0:14:45 CBS reportedly cut pay for the cast of Blue Bloods by 25%.
    0:14:54 Industry-wide, actors have seen their median hourly wage decline by 56% since 2013.
    0:15:01 Television writers, who went on strike with zero leverage just as their employers were scaling back content budgets
    0:15:04 and shifting production overseas,
    0:15:13 are 1.5 times more likely to work for the guild minimum than they were a decade ago.
    0:15:18 An apex predator released into the wild has reproduced asexually,
    0:15:24 doesn’t need distribution partners, and is devouring the ecosystem.
    0:15:28 Since launching its original content business in 2012,
    0:15:37 Netflix’s market cap has increased 7,337%.
    0:15:42 This means the industry is booming for all involved, no?
    0:15:46 The dominant means of production for scripted television is Netflix,
    0:15:51 which has flexed this muscle to reshape the flows of value.
    0:15:58 Specifically, it has reduced production costs while massively investing to create an explosion
    0:16:03 in the amount of content transferring value from all parts of the ecosystem
    0:16:06 to the company’s shareholders and subscribers.
    0:16:14 If you live in LA, you’ve likely given four stars to a former producer of a reality TV series.
    0:16:20 There are 180,000 members of SAG-AFTRA and last year,
    0:16:28 86% of them didn’t qualify for health insurance as they made less than $26,000.
    0:16:36 Constant reminders from CNBC regarding the market touching new highs masks a deeper issue.
    0:16:44 As in the future described by William Gibson, the future/prosperity of media is here.
    0:16:47 Just not evenly distributed.
    0:16:56 AI, Netflix, and the big tech platforms are eating everything and they have few, if any, predators.
    0:17:01 The dear and alligators, industry workers, have no means of defense
    0:17:06 because they’ve never encountered this species or technology before.
    0:17:10 The result is an atmosphere of anxiety and fear.
    0:17:16 These emotions are common sense.
    0:17:18 Life is so rich.
    0:17:29 [Music]

    As read by George Hahn.

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