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0:01:57 I’m Scott Galloway, and this is No Mercy, No Malice.
0:02:02 As President Trump upends the post-World War II order,
0:02:07 it’s finally dawning on Europe that it can no longer rely on America.
0:02:12 Europe becomes a union, as read by George Hahn.
0:02:22 The president is pulling back the security blanket that’s protected Europe since 1945
0:02:27 and imposing 25% tariffs on steel and aluminum imports,
0:02:32 claiming the European Union was formed to screw the United States.
0:02:35 As the U.S. upends transatlantic ties,
0:02:40 the EU is awakening to the reality that its rich uncle has lost his shit
0:02:44 and can no longer be trusted, much less depended on.
0:02:48 As dangerous as this is, we should ask,
0:02:50 what could go right?
0:02:56 This rift presents an opportunity for the EU to harness its economic strength
0:02:59 and finally become a union.
0:03:02 Skepticism is warranted.
0:03:06 The bloc of 27 member states has a host of problems,
0:03:09 waning competitiveness against the U.S. and China,
0:03:11 lagging investment,
0:03:13 costly regulation,
0:03:15 lack of coordination,
0:03:17 sclerotic decision-making,
0:03:18 and political division.
0:03:24 Only four of the world’s top 50 tech companies are European,
0:03:28 according to a report last year led by Mario Draghi,
0:03:31 the former president of the European Central Bank.
0:03:33 Without radical change,
0:03:35 Draghi said,
0:03:39 Europe’s reason for being is at risk.
0:03:44 But with American brand equity eroding at a breathtaking pace,
0:03:46 Europe could fill the void.
0:03:48 Under Trump,
0:03:50 the U.S. is caving to Russia,
0:03:51 a murderous autocracy.
0:03:56 The pre-orchestrated ambush of a democratically elected leader in Ukraine
0:03:58 was a low point in American history.
0:04:03 Typical head-up-your-ass thinking from a leader who’s decided to alienate allies,
0:04:06 raise costs for American consumers,
0:04:09 and reduce demand for our products overseas.
0:04:14 The definition of stupid is harming yourself while harming others.
0:04:18 These policies are stupid.
0:04:20 So how should Europe respond?
0:04:26 First, it’s critical the EU significantly boost its spending.
0:04:32 EU defense investment last year accounted for just 1.9% of its GDP,
0:04:40 well short of the level of 3.5% that’s needed to respond to today’s existential crisis.
0:04:44 Europe is finally getting serious about security.
0:04:46 Ursula von der Leyen,
0:04:48 president of the European Commission,
0:04:54 set out a plan to mobilize 800 billion euros for defense,
0:05:00 including a 150 billion euro loan program to pay for weapons and technology,
0:05:04 while Germany’s chancellor-in-waiting, Friedrich Mertz,
0:05:07 stressed the need for independence from the U.S.
0:05:10 Mertz’s center-right Christian Democrats
0:05:13 and the leaders of his likely coalition partner,
0:05:15 the center-left Social Democrats,
0:05:19 have agreed to relax limitations on German borrowing
0:05:23 and inject hundreds of billions into the country’s military and infrastructure.
0:05:37 Europe has a GDP 10 times the size of Russia’s,
0:05:45 but Putin is spending 40% more on the war than Ukraine and all its allies, including the U.S., combined.
0:05:54 The next step is seizing more than 200 billion euros of frozen Russian assets held in Brussels.
0:06:13 European countries stopped short of confiscating the funds amid fears that it could breach international law and undermine trust in Europe as a place to invest.
0:06:36 It’s worth noting that about 2.5 billion pounds from the sale of Chelsea football club by Russian billionaire Roman Abramovich is just sitting in a bank account amid protracted talks about how the money will be unlocked.
0:06:40 It’s time to pull the trigger on the frozen funds.
0:06:48 This would move the EU upstream of the policies of the U.S. president and remove his leverage to force a surrender.
0:06:57 Another positive emerging from the chaos is stronger collaboration between the EU and the U.K.
0:07:04 Almost nine years after Britain voted to leave the bloc, one of the biggest self-inflicted injuries in history,
0:07:07 the U.K. is moving closer to Europe again.
0:07:18 Prime Minister Keir Starmer has proposed forming a coalition of the willing to police any ceasefire in Ukraine with his country ready to,
0:07:23 quote, put boots on the ground and planes in the air, unquote.
0:07:30 Britain has also shown support for a multilateral fund and joint military financing to fortify Europe’s defenses.
0:07:38 At a time when European countries are already under financial pressure, pouring more money into defense will be painful.
0:07:43 In the U.K., Starmer has drawn fire over his plan to cut the foreign aid budget to fund the military.
0:07:51 But the prime minister has, quote, found a new purpose abroad, unquote, after getting off to a shaky start,
0:07:56 as The Economist notes in a cover story this week under the headline, Winston Starmer.
0:08:07 Putting the moral argument to support Ukraine aside, leaders can make an economic case for military investment as it paves the way for innovation.
0:08:11 Consider the U.S. Defense Advanced Research Projects Agency.
0:08:23 The agency, better known as DARPA, played a critical role in breakthroughs including GPS navigation, stealth technology, and mRNA vaccines.
0:08:31 In Israel, where technology and national security go hand in hand, the military serves as an incubator of startups.
0:08:36 Or look at Ukraine, which has revolutionized drone warfare.
0:08:43 The Trump administration fails to see what may have been the best investment by the U.S. in recent history.
0:08:51 The 67 billion dollars the U.S. has provided in military aid to Ukraine is a significant sum.
0:09:00 And Americans justifiably question funding a war thousands of miles away when they can’t find jobs or afford diabetes medication.
0:09:09 However, much of that spending benefits U.S. military suppliers, creating jobs and stimulating the economy.
0:09:14 As it happens, mostly in red states, but that’s a different post.
0:09:27 What’s more, using the equivalent of about 7% of our defense budget, we’re crippling Russia’s army, hobbling Putin’s economy, and castrating proxies that pose a terrorist threat.
0:09:31 All without putting a single American boot on the ground.
0:09:42 We’ve taken out a third of an enemy’s kinetic power and sent a message to China regarding its long-contemplated invasion of Taiwan.
0:09:53 They’ve no doubt taken notice of how formidable a motivated fighting force can be defending their homeland when armed with Western armaments and intelligence.
0:10:04 The U.S. retreat presents an opportunity for Europe.
0:10:15 In Germany, bold plans to step up investment in defense and infrastructure are sparking optimism that the manufacturing sector will get a much-needed boost.
0:10:22 Weapons maker Rheinmetall aims to convert some car part plants to produce military equipment.
0:10:29 And Hensold, which makes sensors and radars, is considering hiring software engineers from automotive suppliers
0:10:31 that have experienced huge job cuts.
0:10:39 Rheinmetall, French warplane maker Dassault Aviation, Italian defense and aerospace company Leonardo,
0:10:48 Britain’s BAE Systems, and Sweden’s Saab, a maker of jets, submarines, and anti-tank systems,
0:10:56 have all seen dramatic rallies in their share prices as investors anticipate an increase in military spending.
0:11:03 The benefits could spill over into other sectors, too, giving a lift to a sluggish European economy.
0:11:11 It’s estimated that a debt-financed increase in defense spending to 3.5% of GDP,
0:11:17 with those funds directed to infrastructure, R&D, and manufacturing from European sources,
0:11:22 could increase economic output by as much as 1.5% per year.
0:11:30 If Europe successfully adapts, it will expand in promising areas including AI,
0:11:34 semiconductors, digital infrastructure, and quantum computing.
0:11:40 Building on its manufacturing, technology, and intellectual property prowess,
0:11:55 Europe has economic influence, but it also needs resolve, a resource in abundance in Russia.
0:11:59 Think about what Ukraine and its allies are up against.
0:12:04 Putin has shown a willingness to shed a staggering amount of blood,
0:12:10 sending waves of young men forward into a meat grinder, as the strategy is known,
0:12:12 in a bid to overwhelm the enemy.
0:12:20 Ukraine estimates Russia lost 150,000 soldiers in 2024 alone,
0:12:24 almost three times the number of Americans who died in the Vietnam War.
0:12:27 How does Russia recruit?
0:12:31 In some regions, through substantial upfront payments.
0:12:39 U.S. Defense Secretary Pete Hegseth plays down the importance of values relative to hard power.
0:12:41 He says, quote,
0:12:45 You can’t shoot values, you can’t shoot flags, unquote.
0:12:48 He’s wrong.
0:12:57 Afghanistan, Vietnam, 1939 Britain, and the 13 American colonies all faced bigger fighting forces.
0:13:00 And they prevailed.
0:13:05 The EU lacks the funds, but this can be fixed.
0:13:08 The real question is, do they have the resolve?
0:13:15 When my mom was a young girl growing up in London during World War II,
0:13:18 she and her family had to endure the Blitz.
0:13:26 They were forced to sleep in dark tube stations where they’d pass out gas masks shaped like Disney characters
0:13:28 so scared children would agree to put them on.
0:13:31 Eight decades after Germany surrendered,
0:13:36 How many Europeans are willing to sleep underground to live through the night?
0:13:45 Achieving peace, security, and stability will require tough decisions and sacrifices,
0:13:49 the kind of sacrifices that win wars.
0:13:52 Is the EU willing to make them?
0:13:56 As Trump advances with his America First agenda,
0:13:59 it’s easy for proponents of liberty and democracy to despair.
0:14:04 But there’s nothing like the threat of a brutal autocrat in Russia
0:14:09 and an unpredictable president in the White House to bring unity to the continent.
0:14:14 The bad news is the EU can no longer count on the US.
0:14:16 The good news?
0:14:18 They may not need us.
0:14:23 Life is so rich.
0:14:40 It’s been reported that one in four people experience sensory sensitivities,
0:14:45 making everyday experiences like a trip to the dentist especially difficult.
0:14:50 In fact, 26% of sensory sensitive individuals avoid dental visits entirely.
0:14:57 In Sensory Overload, a new documentary produced as part of Sensodyne’s sensory inclusion initiative,
0:15:01 we follow individuals navigating a world not built for them,
0:15:06 where bright lights, loud sounds, and unexpected touches can turn routine moments
0:15:09 into overwhelming challenges.
0:15:14 Burnett Grant, for example, has spent their life masking discomfort in workplaces
0:15:16 that don’t accommodate neurodivergence.
0:15:20 I’ve only had two full-time jobs where I felt safe, they share.
0:15:22 This is why they’re advocating for change.
0:15:28 Through deeply personal stories like Burnett’s, Sensory Overload highlights the urgent need for spaces,
0:15:32 dental offices, and beyond that embrace sensory inclusion.
0:15:37 Because true inclusion requires action with environments where everyone feels safe.
0:15:41 Watch Sensory Overload now, streaming on Hulu.
0:15:48 This is advertiser content brought to you by the all-new Nissan Murano.
0:15:51 Okay, that email is done.
0:15:54 Next on my to-do list, pick up dress for Friday’s fundraiser.
0:15:56 I’ll write, okay, I’ll write, where, where are my keys?
0:15:58 Oh, in my pocket.
0:15:59 Let’s go.
0:16:03 First, pick up dress, then prepare for that big presentation.
0:16:05 Walk, dog, then…
0:16:06 Okay, inhale.
0:16:10 One, two, three, four.
0:16:12 Exhale.
0:16:15 One, two, three, four.
0:16:19 Ooh, who knew a driver’s seat could give such a good massage?
0:16:24 Wow, this is so nice.
0:16:26 Oops, that was my exit.
0:16:28 Oh well, that’s fine.
0:16:29 I’ve got time.
0:16:35 After the meeting, I gotta remember to schedule flights for our girls’ trip.
0:16:37 But that’s for later.
0:16:44 Sun on my skin, wind in my hair.
0:16:46 I feel good.
0:16:48 Turn the music up.
0:16:54 Your all-new Nissan Murano is more than just a tool to get you where you’re going.
0:16:56 It’s a refuge from life’s hustle and bustle.
0:17:02 It’s a place to relax, to reset, into spaces between items on your to-do lists.
0:17:05 Oh, wait, I got a message.
0:17:09 Could you pick up wine for dinner tonight?
0:17:10 Yep, I’m on it.
0:17:14 I mean, that’s totally fine by me.
0:17:19 Play Celebrity Memoir Book Club.
0:17:21 I’m Claire Parker.
0:17:22 And I’m Ashley Hamilton.
0:17:26 And this is Celebrity Memoir Book Club.
0:17:34 This episode is brought to you by On Investing, an original podcast from Charles Schwab.
0:17:37 I’m Kathy Jones, Schwab’s Chief Fixed Income Strategist.
0:17:40 And I’m Lizanne Saunders, Schwab’s Chief Investment Strategist.
0:17:44 Between us, we have decades of experience studying the indicators that drive the economy
0:17:46 and how they can have a direct impact on your investments.
0:17:50 We know that investors have a lot of questions about the markets and the economy,
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0:17:56 So download the latest episode and subscribe at schwab.com slash oninvesting
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0:01:09 Do you mind if I ask you a few questions?
0:01:11 Sure, if it’s correct.
0:01:15 Just how worried should we be about artificial intelligence?
0:01:18 So I’ll tell you a story.
0:01:25 This week on Unexplainable, the first episode of Good Robot, a four-part series from Julia Longoria.
0:01:33 It’s a series about the stories we tell about AI and how those stories are shaping AI itself.
0:01:37 Follow Unexplainable wherever you get your podcasts.
0:01:40 Episode 340.
0:01:42 3-4-0 is the area code for the Virgin Islands.
0:01:44 In 1940, McDonald’s was found.
0:01:45 A true story just last week.
0:01:50 I saw this ridiculously hot guy spank his son for throwing his fries on the ground.
0:01:52 So I threw my fries on the ground.
0:02:12 Welcome to the 340th episode of the Prof G-Pod.
0:02:12 What’s happening?
0:02:15 The dog is back from Austin.
0:02:15 That’s right.
0:02:21 Came in last night and is in New York for a few days before heading off to Tulum.
0:02:22 South by Southwest is wonderful.
0:02:23 I love Austin.
0:02:28 I think that people have a tendency to sort of stereotype all of Texas.
0:02:37 I just think that’s like trying to stereotype all of Europe or, I don’t know, the Democrats trying to stereotype all of Latinos and thinking that they look at every issue through their identity.
0:02:41 I love Austin and just very much enjoy South by Southwest.
0:02:44 I pony up to the proper hotel.
0:02:47 I pony up to the bar and I was a little bit drunk and a little bit high.
0:02:48 I took an edible, sea above.
0:02:53 It was a Sunday night and I found this really hot guy and I said, you know, I have an enormous dick.
0:02:55 And he said, I don’t like big dicks.
0:02:58 And so I leaned in and asked, well, do you like liars?
0:02:59 That’s good.
0:03:00 That’s good.
0:03:05 Anyways, I’m back in New York and I am going to, what am I going to do?
0:03:10 I was just on PBS of all places talking about the Trump administration.
0:03:16 I’m going on with Anderson Cooper tomorrow, here to see some friends, going out to the new clubs, the new membership clubs.
0:03:17 It’s crazy.
0:03:20 There’s one opening every month.
0:03:26 I’m at the stage of my life where I like that because I want an easy plan B just to roll up and not have to, I don’t know.
0:03:30 I kind of just want to be in places that 10 years ago would not have me as a member.
0:03:32 So I enjoy it.
0:03:33 But there’s one opening every week.
0:03:35 They’re definitely all going to put each other out of business.
0:03:45 And the downside to all of this is that we continue to sequester the 0.1% or the 1% from the rest of the population.
0:03:47 And that is it’s never been a better time to be rich.
0:03:55 It’s just if you’re wealthy now, you can go to these amazing places with a curated crowd and always get in.
0:04:02 And I think it’s sort of, I kind of miss, what should I say, I miss, like rolling up to a place in New York and not being sure if you were going to get in.
0:04:03 But everyone sort of had a shot.
0:04:09 Now, granted, if you were hot, you had a much bigger shot or if you knew who was throwing the party or the club promoter.
0:04:10 Quick story.
0:04:20 One of the club promoters I met in the early 2000s when I moved to New York and I was single, I wanted to go to hot places with people much hotter and much younger than me.
0:04:21 Pretty much everybody.
0:04:25 And I got to know this guy named Scott Sartiano as he was sort of a club promoter.
0:04:35 And then, so you got to know Scott if you were, you know, a guy like me, douchebag, trying to hang out with wealthy men and young, attractive women.
0:04:47 Scott basically went to Argentina and then had sort of an awakening and returned to his Christian roots and decided that he wanted, that his kind of life was void of meaning and decided to go to Africa.
0:04:54 And we started getting messages and emails from Scott where he was on this thing called the Mercy Ship where they did surgery on kids.
0:05:07 And he was there as a photographer sending back images that would help raise money of kind of before and after these surgeries from these wonderful medical personnel donating their time, their treasure, and their talent to try and do basic surgery on children living in poverty.
0:05:10 And then he came back and he said, you know, I have this idea.
0:05:14 I want to raise $5,000 for my friends and go back and build a well.
0:05:15 And he did that.
0:05:18 And he said, I can bring safe potable water to 400 people.
0:05:20 And then he came back and said, okay, I did that.
0:05:24 I want to raise $15,000 and build three wells.
0:05:33 Anyways, fast forward about 20 years later, I think Scott’s going to raise $120 million this year and has brought safe drinking water to literally millions of people.
0:05:45 And it kind of reminds me or it takes me back to what is the silver lining that I continue to have to remind myself of as I struggle with anger and depression and have a tendency to see things kind of as a glass half empty, if you will.
0:05:58 And that is the number of people spending time helping people they will never meet, either through nonprofits or special interest advocacy, whatever it might be, is the highest it’s ever been in history.
0:06:01 For the first time in my life, I’m sort of triggered by what’s going on.
0:06:05 I’ve always been able to sort of disassociate from the news.
0:06:13 I’m self-absorbed and indulgent and was just focused on me all the time and whatever was happening in D.C. or across different groups.
0:06:13 I didn’t really care.
0:06:19 One, because the majority of the prosperity was crammed into my group, essentially white heterosexual males.
0:06:22 Think about the tailwind I’ve had.
0:06:23 And I’m not being humble.
0:06:24 I’m a fucking monster.
0:06:25 I’m really talented.
0:06:26 I’m hardworking.
0:06:40 But if you look at America from when I was born, 1974, 64, to about 2000 and call it 14, before like young men kind of became the enemy, according to everybody.
0:06:52 Essentially, you had all of the prosperity of the most prosperous economy, economic model in history, kind of the 50 years between the 60s and the 10s or the aughts in the United States.
0:07:02 And almost all of that prosperity was crammed into a subset of America of about a third of its population, specifically straight white males.
0:07:08 So think about just literally the Category 5 hurricane winds that have been in my sails.
0:07:09 And this isn’t guilt.
0:07:12 This isn’t I don’t even think this is that kind of progressive.
0:07:14 It’s just it’s just data.
0:07:18 America grew its GDP faster in those 50 years.
0:07:26 And I think the rest of the world, maybe the exception of China, if you took out China, we had more GDP growth, more income, more prosperity than the entire world combined if you took out China.
0:07:30 And all of that prosperity was crammed into one third of its population.
0:07:34 I mean, it’s just as I think about it, it’s just extraordinary.
0:07:35 Anyways, back to Scott.
0:07:53 Here’s a guy who decided rather than trying to draft off of the alcohol abuse and need to feel social and the midlife crisis that I’ve been going through for the last 40 years and promote clubs that attracted those type of types of individuals, that he was going to try and plant trees the shade of which he would never sit under.
0:08:01 And what’s so impressive about his firm, Charity Water, is that he brought so much innovation in the nonprofit sector.
0:08:06 I think the nonprofit sector, I would argue the nonprofit sector is one of the worst run sectors in the world.
0:08:08 I find that the majority of it, not the majority, is that fair?
0:08:25 A lot of it is virtue signaling and basically let’s throw parties and give people a sense that they have purpose in their lives and they end up spending almost as much money as they raise such that they can have a brunch in a windowless hotel room somewhere in Palm Beach and feel good about themselves.
0:08:37 And they’re right, and I found that Scott is both right and effective and spent a lot of time on things like design and an app and doing incredible content marketing.
0:08:38 And he’s just very savvy.
0:08:43 He takes some of his biggest donors each year to Africa and obviously gets them very invested in the project.
0:08:48 He spends the majority, the vast majority, runs a very lean organization of the money that goes in.
0:08:56 He does something called the well, where a small number of donors cover all of the overhead such that he can legitimately raise money and say all of it’s going to wells.
0:09:10 Anyways, there’s tremendous innovation there, and it strikes me more than anything that what is it about, as you get older, the void, if you’re feeling a certain void and you’re fortunate to have to some level of economic security or you don’t have a lot of economic dependence,
0:09:14 around trying to find some sort of purpose or help others.
0:09:23 And one of the things I have found that helps me when I’m feeling down is to start thinking a little bit about trying to be in the service of others,
0:09:28 whether it’s either giving a little bit of money away to a charity, volunteering somewhere.
0:09:29 I don’t do a lot of that.
0:09:30 I’m generous with everything but my time.
0:09:34 But trying to get out of your own headspace and focus on other people.
0:09:40 And I have found that people who generally are in the service of others are the happiest.
0:09:53 And it’s very anthropological because if you think about what’s going on in your amangala or wherever it is that decides if you’re happy or if good or bad cholesterol should be flushed into your system to either make you die faster or live longer,
0:09:59 you essentially have a security camera on in your brain that’s keeping track of your value add to the species.
0:10:01 So that’s the bad news.
0:10:07 The good news is it’s very grainy and has very low resolution so you can fool it.
0:10:14 So when you’re on a Stairmaster or you’re lifting weights for CrossFit, it’s under the impression that you’re hunting prey or building housing and it decides to let you live a little bit longer.
0:10:21 If you are doing a crossword puzzle and think so, you’re making important decisions for the clan or the tribe, we’re going to let you stick around for a little bit longer.
0:10:32 If you are caring for other people, the physical act of caring for children and other people or being concerned about other people or being social, which in mistakes for caring for other people,
0:10:37 it again secretes a hormone that clears out the bad cholesterol and decides to let you live a little bit longer.
0:10:47 Back to me when I first moved to New York, I was pretty much just leaving my cave for food and sex or an attempt to have sex.
0:10:48 And I was sequestering from everybody.
0:10:50 I’d gone through a divorce.
0:10:52 I’d left the Bay Area.
0:10:53 I hated technology.
0:10:54 I hated VCs.
0:10:58 I wasn’t even that big a fan of my kind of cohort or community out there.
0:11:02 And I basically said to my ex, you can have almost everything, including our friends.
0:11:02 I’m out.
0:11:05 Still don’t go back to San Francisco much.
0:11:07 I think I’m traumatized is the wrong word.
0:11:09 Just didn’t enjoy that part of my life very much.
0:11:21 And moved to New York and immediately started kind of sequestering from everything and kind of thinking, okay, I’m going to just be selfish and be on my own.
0:11:27 And something kicked in and I immediately figured out, okay, if I do this, I’m going to die.
0:11:28 If I continue this.
0:11:39 I mean, being totally selfish and going out and having an amazing time in New York with a little bit of money, it was a really meaningless and empty kind of existence.
0:11:43 Now, as far as meaningless and empty existences go, it was pretty good.
0:11:47 But I definitely realized I’m probably going to die in my 50s if I continue to do this.
0:11:54 And I worry that a lot of young people are being convinced mostly by technology that they can sequester from society and have productive lives.
0:11:55 And that’s just not true.
0:11:56 You lead a very unhealthy life.
0:12:03 Now, especially men who don’t cohabitate with someone else have a life expectancy of like a decade less than people who do.
0:12:06 Let’s get back to the regularly scheduled program.
0:12:13 In today’s episode, we’re speaking with Barry Ritholtz, the co-founder, chairman, and chief investment officer of Ritholtz Wealth Management.
0:12:17 He’s also the host of Masters in Business, the most popular podcast on Bloomberg Radio.
0:12:26 We discussed with Barry his new book, How Not to Invest, the Ideas, Numbers, and Behaviors that Destroy Wealth and How to Avoid Them.
0:12:27 I love Barry.
0:12:29 I think he’s got a great brain and he’s a good guy.
0:12:31 He actually, him and his wife actually adopt dogs.
0:12:35 How can you not like a guy that adopts rescue dogs?
0:12:39 And his partner, Josh Brown, who’s on CNBC, you know, like 11 hours a day.
0:12:47 He’s literally the Joe and Mika of CNBC has kind of this fantastic, pragmatic approach to the markets.
0:12:51 And I like the way these guys approach investing and wealth management.
0:12:52 And I always learn a lot from them.
0:13:00 And they’re sort of, I think there’s sort of a throwback to the initial kind of alternative investments community where they’re kind of these Long Island guys that just keep it very real.
0:13:03 They really enjoy their conversation.
0:13:10 And I find that they’re really sober and honest and give great advice.
0:13:12 They’re not going to tell you like which stock to buy.
0:13:13 They’re going to tell you about diversification.
0:13:19 They’re going to tell you about low cost ETFs and index funds and how you build wealth slowly,
0:13:25 which is kind of the best way to build wealth in the sense that, like I’ve always said, I know how to get you rich.
0:13:26 That’s the good news.
0:13:27 The bad news is the answer is slowly.
0:13:29 Anyways, I have a lot of respect for these guys.
0:13:31 I generally think they’re good fiduciaries for other people’s money.
0:13:41 And I think they’re avoiding what is the biggest grift in history, and that is this general myth that there are certain individuals and funds that can outperform the market over the long term.
0:13:42 They can’t.
0:13:50 And in exchange for fooling you into thinking this, they’re going to charge you onerous fees, which over the medium and long term are going to create an underperformance relative to the market.
0:13:53 And they’ve always been very sober and honest about that.
0:14:00 So anyways, with that, please stick around for our conversation with Barry Ritholtz, co-founder, chairman and chief investment officer of Ritholtz Wealth Management.
0:14:05 Barry, where does this podcast find you?
0:14:11 I’m sitting at 731 Lex in my regular podcast studio at Bloomberg.
0:14:15 I think you were some of the first podcasts I ever came on at Bloomberg.
0:14:17 I mean, I remember coming in there seven or eight years ago.
0:14:18 Yeah, you’re a great interviewer.
0:14:21 So let’s bust right into it.
0:14:24 Your book, How Not to Invest, is out next week.
0:14:31 In it, you grew common investing mistakes into three buckets, bad ideas, bad numbers, and bad behavior.
0:14:33 Break these down for us.
0:14:33 Sure.
0:14:37 So first, we have a century of books telling us what to do.
0:14:44 And despite, I don’t know, tens of thousands of books, most people are still pretty mediocre investors.
0:14:47 So I took a page from the two Charlies.
0:14:51 Charlie Ellis, who compared investing to tennis.
0:14:54 Most people are not professional tennis players.
0:14:56 Professionals win by scoring points.
0:14:59 Amateurs lose by unforced errors.
0:15:06 And if you just bring that approach to investing and say, rather than try and find the next NVIDIA
0:15:12 or jump in and out of the market before and after the next crash, how about we just make fewer mistakes?
0:15:16 And it turns out that puts you 90% ahead of everybody else.
0:15:22 And the other Charlie is Charlie Munger, who in his inimitable fashion was asked,
0:15:24 are you and Warren smarter than everybody else?
0:15:26 Is that why you’re so successful?
0:15:30 And Munger responded, no, we’re just less stupid.
0:15:34 Less stupid is better than smarter, at least in investing.
0:15:44 So when I was trying to put the book together, I just started thinking about all the errors I had come across over 30 years.
0:15:49 And they neatly fit into, we believe things that aren’t true.
0:15:54 We don’t understand the numbers that drive the markets, the economy, investing.
0:15:58 And then we engage in behavior that is super self-destructive.
0:16:04 You mentioned that you never planned on becoming a wealth manager, but we’re driven by frustration with Wall Street’s practices.
0:16:14 What are some of those practices that are kind of potentially put a money manager or Wall Street not on the same side as its investor base?
0:16:15 So I didn’t go to business school.
0:16:16 So I didn’t go to business school.
0:16:18 I went to law school.
0:16:27 And a big part of the legal education is understanding your fiduciary obligation to your clients, your ethical obligation.
0:16:32 Something similar applies to accounting, to the medical practice.
0:16:36 Doctors have a similar obligation to their patients.
0:16:48 And yet money is so important to our safety and security and financial well-being, our retirement, what we pass down to our children and to our philanthropy.
0:17:00 But the rules were such that there’s no greater obligation to you from traditional financial practice than you get from a used car salesman.
0:17:02 It made no sense to me.
0:17:06 Wait, you just can’t misrepresent that the transmission is bad?
0:17:09 And other than that, it’s an arm’s length transaction?
0:17:12 That never made any sense.
0:17:19 You can just do what you want to do with the client, harvest their organs, sell them on the black market.
0:17:20 That’s fine.
0:17:25 It simply was inconsistent with all the other professional relationships we had.
0:17:35 And following the financial crisis, which I more or less got the top and bottom right, lots of people started throwing money at me.
0:17:40 I wasn’t comfortable referring those people to other places.
0:17:50 And I wasn’t comfortable even at the firm I was at at the time because they were a little bit, you know, it’s called a hybrid model, a little bit of a fiduciary, except when it’s inconvenient.
0:17:57 Then they swap hats and suddenly they can just be a broker and maximize profits.
0:18:01 And it was really out of just absolute frustration.
0:18:04 All right, we can’t turn these people loose to the wolves.
0:18:09 Let’s see if we can give them a provide a service that puts them first.
0:18:15 And, you know, over the past 20 years, Wall Street has slowly drifted in that direction.
0:18:20 It’s still not quite all the way there, but it’s much further along than it was 10, 15 years ago.
0:18:29 So on up before, and by the way, Barry and his partner, Josh, and I get together, not regularly, but we do get together and they kind of save me for myself.
0:18:36 I want to throw out a couple of theses around biases or some of the things that have haunted me in terms of investing and have you comment on them.
0:18:41 And then just some general structural impressions or thoughts.
0:18:45 The first is that your emotions are your enemy.
0:18:49 And that is when I get hurt really badly, I’m just like, I can’t take any more pain.
0:18:57 I want to sell when I do well, my greed glands get going and I start thinking about levering up with margin because I start believing I’m actually good at this.
0:19:08 And I find, and I have to check myself, I think of that Seinfeld episode where George Costanza decides to do everything that he instinctively, he does the opposite of what he thinks he should do and his life gets much better.
0:19:26 So think about why we even have a limbic system and an amygdala and an emotional response to external input.
0:19:30 Humans now dominate planet Earth.
0:19:32 Wasn’t always that way.
0:19:38 We’re soft, chewy, delicious creatures without fangs or claws.
0:19:39 Or armor.
0:19:41 So, yeah, so we’re super vulnerable.
0:19:53 And we developed a series of subroutines that allowed us to not only stay alive, but adapt and eventually dominate the planet.
0:19:59 And what kept you alive on the Savannah is your fight or flight response.
0:20:06 The ability to quickly identify a potential threat and respond in the most effective way.
0:20:14 That turns out to be great if you’re a biological organism that’s constantly under threat.
0:20:22 But making risk-reward decisions in the market, it goes right to Danny Kahneman’s thinking fast and slow.
0:20:24 Thinking fast keeps you alive.
0:20:29 Thinking slow is how you make money in the markets.
0:20:34 And emotions, your limbic system, are clearly part of that thinking fast.
0:20:41 I love the quote from Dr. William Bernstein, former neurologist and doctor who became an investor.
0:20:49 He said, your entire level of success as an investor is determined by your limbic system.
0:20:53 If you can’t get that under control, you will die poor.
0:20:58 And that is really quite the warning about emotionality and investing.
0:21:09 You’ve actually been an advocate and have been pretty vocal about saying investors are better off buying index funds rather than trying to pick individual stocks.
0:21:17 And yet you’re a money manager and you make fees trying to find alpha, I think.
0:21:24 Help me reconcile why you tell your clients not to just go invest in Vanguard.
0:21:27 Well, we’re big Vanguard investors.
0:21:29 We’re Vanguard, Wisdom Tree, BlackRock.
0:21:40 Our approach is a combination of core and satellite, where the heart of the investing are pretty broad indexes.
0:21:48 U.S. total market, XUS developed some emerging markets.
0:21:56 The idea is, look at, this is a perfect example, recording this towards the end of the first quarter.
0:22:01 And the U.S. is up a percent or two.
0:22:03 Europe is up 15%.
0:22:10 So when you’re diversified over a long period of time, different parts of the world are going to do better or worse.
0:22:17 And that’s the core that should lock the beta in for your portfolio.
0:22:21 Beta being take what the market gives you and be happy.
0:22:24 The satellite are all the things you do around that.
0:22:35 So if you believe in momentum or value or maybe you like technology or India or, you know, there’s a thousand different variations.
0:22:39 Think of it as the Christmas tree is the core index.
0:22:47 The garland and all the ornaments are the stink you put on your portfolio with those satellite things.
0:22:50 However you want to flavor it, you could do that.
0:22:58 There are some other technologies and some other things that we really like that helps us find tax alpha.
0:23:09 And we’re also big believers in what we call advisor alpha, which is what can we do to prevent investors from hurting themselves?
0:23:18 So we have a very simple tactical model that we put a small percentage of the portfolio in and its purpose is not to generate alpha.
0:23:26 Its purpose is to prevent people from touching their real money when things get hairy, as we’ve seen the past week or two.
0:23:30 We don’t learn this lesson, but whenever I’ve met with you and Josh, you guys is drilling home.
0:23:44 And that is people, I think one of the most underappreciated strategies for a risk adjusted return and also limiting your emotional downside is diversification.
0:23:45 It’s so boring.
0:23:58 And yet I just don’t think most of us really think about how powerful it is and really add up our assets and say, OK, if I’ve got 90 percent of my wealth in my home and my vacation home, that’s probably not a great idea.
0:24:03 Or if I’ve got, at some point, U.S. growth will slow down or U.S. tech growth.
0:24:10 My two biggest mistakes, I’ve been wealthy three times, which means I’ve lost it all twice.
0:24:17 And the reason I lost it all twice, and it was hugely emotionally and mentally trying, was I didn’t appreciate the power of diversification.
0:24:19 I was always highly levered to U.S. tech.
0:24:25 And so what do you know, in 2000 and 2008, I was no less a person or no dumber.
0:24:26 I just got wiped out.
0:24:32 Talk about the power of diversification and why we just naturally don’t learn that lesson.
0:24:33 Sure.
0:24:44 So there are two emotional impediments to being and staying emotionally diverse, invest-wise diversified.
0:24:51 The first is being diversified means there’s always something in your portfolio that’s not doing well.
0:24:56 You know, the past decade, it’s been Europe.
0:24:58 Europe has wildly underperformed.
0:25:02 Suddenly, Europe is now doing much, much better than the U.S.
0:25:14 Value has done really poorly over the past decade, in large part because of the shift in markets away from hard industries and towards intellectual property.
0:25:19 And value, at least as historically described, hasn’t adjusted.
0:25:32 So when you’re looking at your portfolio and why is my emerging markets doing poorly and why is this value sleeve underperforming, it’s very easy to get frustrated and walk away from that.
0:25:41 The second factor is we all have a tendency to lean into whatever’s working.
0:25:47 So for the past decade, technology has been great, just as it was in the 90s.
0:25:52 But at a certain point, those things come to an end.
0:26:01 Every cycle turns, every bull market ends, every bear market ends, every period of economic expansion eventually hits a recession.
0:26:05 And so one of the free lunches and there aren’t many on Wall Street.
0:26:18 One of the free lunches is occasionally rebalancing towards a core set of allocations so that one part of your portfolio doesn’t run amok.
0:26:25 And suddenly half of your exposure is to or more is to technology.
0:26:42 We regularly see people come into the office who 10 years ago took a flyer on NVIDIA or Apple or Amazon, and they’re paralyzed because three quarters of a not insubstantial chunk of wealth is one company.
0:26:56 And that single stock risk, not everything is going to be Lehman Brothers and go to zero, but look at General Electric, you know, one of the most beloved stock.
0:26:56 Cisco.
0:26:57 Yeah.
0:26:58 Oh, Cisco.
0:27:00 I have a whole chapter on Cisco.
0:27:02 Amazon, 99 to 2001, lost 90% of its value.
0:27:03 Right.
0:27:04 It was single digits.
0:27:07 People forget Amazon was trading for single digits.
0:27:17 So you give up, you willingly give up potential upside in a single stock because for many, we have no minimums in the firm.
0:27:18 So we have people with $50,000.
0:27:20 We have people with 50 million.
0:27:25 When you hit a certain point, you have to recognize, hey, I won.
0:27:28 There’s no reason to take all this additional risk.
0:27:38 Let’s trade off upside in exchange for steady, ready gains without the possibility of a 90% collapse.
0:27:41 We’ll be right back.
0:27:55 It’s been reported that one in four people experience sensory sensitivities, making everyday experiences, like a trip to the dentist, especially difficult.
0:28:01 In fact, 26% of sensory sensitive individuals avoid dental visits entirely.
0:28:07 In Sensory Overload, a new documentary produced as part of Sensodyne’s sensory inclusion initiative,
0:28:19 We follow individuals navigating a world not built for them, where bright lights, loud sounds, and unexpected touches can turn routine moments into overwhelming challenges.
0:28:26 Burnett Grant, for example, has spent their life masking discomfort in workplaces that don’t accommodate neurodivergence.
0:28:30 I’ve only had two full-time jobs where I felt safe, they share.
0:28:33 This is why they’re advocating for change.
0:28:43 Through deeply personal stories like Burnett’s, Sensory Overload highlights the urgent need for spaces, dental offices, and beyond that embrace sensory inclusion.
0:28:48 Because true inclusion requires action with environments where everyone feels safe.
0:28:52 Watch Sensory Overload now, streaming on Hulu.
0:28:55 Support for this show comes from Indeed.
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0:30:03 This week on Property Markets, we speak with Jonathan Cantor, former Assistant Attorney General for the Antitrust Division of the U.S. Department of Justice.
0:30:11 We discuss which sectors he believes most need antitrust enforcement and how businesses actually feel about antitrust.
0:30:14 The dirty little secret is that business actually likes what we do.
0:30:19 They’re the ones encouraging us to bring cases because they want access to markets.
0:30:20 They want supply chains that are affordable.
0:30:25 They want greater supply of key inputs, right?
0:30:27 This is something that’s quite popular in business.
0:30:31 You can find that conversation exclusively on the Prof G Markets podcast.
0:30:36 A couple more theses.
0:30:40 We’ve talked about index funds and fees.
0:30:46 I still don’t think the market is really cognizant of how much of your return fees will eat up.
0:30:51 And I would argue, and I’ll put forward a thesis, that the alternative investments community,
0:30:55 and I would say a good 50% of my friends are in this community,
0:31:01 who recognize the most extraordinary gains relative to their talent.
0:31:02 And by the way, they’re exceptionally talented.
0:31:09 But from kind of 1995 to 2015, I think that 20-year period will be remembered
0:31:17 as the period where a small group of people made more money on a risk-adjusted basis than any sector in history.
0:31:30 I had friends who were good, hardworking, work at hedge funds, and the good, hardworking people in other industries were making $200,000 to $2 million a year, and they were making $20 to $30 million a year.
0:31:37 And then that came to an end, or slowly but surely, I would say the majority of them were even out of the business over the last five or 10 years.
0:31:41 They stayed in the business, but their AUM’s gone from, you know, $3 billion to $300 million.
0:31:52 And my thesis is that the alternative investment sector could best be described, that’s mutual funds, hedge funds, as San Francisco real estate, and that is expensive but bad.
0:31:59 And that is, the returns have been in stocks that everybody knows, so no one’s going to pay you $2 and $20 to buy NVIDIA.
0:32:07 And they’ve been left trying to find alpha in a narrow part of the market, and they’ve just vastly underperformed.
0:32:16 I think the analysis shows if you added up all the people on CNBC who come on and pitch stocks, they have underperformed the S&P by the amount of their fees.
0:32:21 Isn’t this arguably one of the biggest grifts in economic history, the alternative investment community?
0:32:34 The Financial Times called the hedge fund a scheme to transfer money from naive investors to savvy managers, and I think that overstates it a little bit.
0:32:41 You know, the golden age of hedge funds was pre-Reg FD, where you could have an information edge.
0:32:57 And before quants were really everywhere, to say nothing of the few quants that really put up killer numbers in the 80s, 90s, and 2000s, right up to the financial crisis.
0:33:00 Jim Chanos has a wonderful quote in the book.
0:33:05 When he started in the 1980s, there were 100 hedge funds, and they all create alpha.
0:33:12 Today, there’s 11,000 hedge funds, and more or less those same 100 are the ones that generate alpha.
0:33:15 So my thinking on alternatives has evolved.
0:33:25 If you can get into the elite hedge funds, the top, let’s call it decile, the DE shores of the world, if they’re willing to take your money,
0:33:36 and it’s their money-making fund, not their secondary under any hedge fund that’s successful, always rolls out a, you know, a plan B for the masses,
0:33:41 and it never does as beautifully as the first one does, yeah, that’s a great opportunity.
0:33:54 What we’ve seen since the financial crisis and the era of zero interest rate has been a shift in assets instead of flowing into hedge funds,
0:33:57 and they’re still going in to some degree.
0:33:58 It’s $3 trillion.
0:34:03 They have moved to private credit and private equity.
0:34:12 And that seems to be the alternative that, if not generating alpha over and above what the market does,
0:34:18 at least they can make a plausible case that it’s not correlated and it’s diversified.
0:34:21 We’re not putting money into publicly traded stocks.
0:34:23 We’re not putting money into bonds.
0:34:32 We are buying credit and or private companies and therefore underexposed to the equity markets.
0:34:34 At least that’s a plausible argument.
0:34:44 I’m not so sure I fully buy into all of it, but it’s a better argument than I’m going to aggressively trade on a leveraged basis public equities.
0:34:49 I still can’t help but stock pick, and I want to put a couple of my core theses out there and have you respond to them.
0:34:55 One is regarding what you said about Europe, and every year at the end of the year, I make a much prediction.
0:35:04 One of my predictions in November of 2024 was that we were finally going to see the flows, the rivers reverse.
0:35:10 And that is someone told me that if you added in debt, the U.S. market accounted for 70% of the world’s value.
0:35:19 If it’s just equities, it’s 50%, but if you added debt, the total value of the world, if you put a price tag on it, is represented.
0:35:21 70% of that is the U.S.
0:35:27 And I thought, okay, if I could buy the U.S. for $70 or the rest of the world for $30, I would buy the rest of the world for $30.
0:35:34 And so I’ve started rotating out of U.S. growth and into value, some in LATAM, some in China, and some in Europe.
0:35:45 And I read that U.S. growth is at 98%, meaning on a scale of 1 to 100, it’s only been more expensive, 2% of its history.
0:35:48 And this is about a month old, so I’m sure it’s changed.
0:35:53 But European value was at 2%, meaning 98% of its history had been higher.
0:36:03 So granted, this is just stock picking on a more meta level, but doesn’t the U.S. just generally speaking, and I’m curious if you’re telling your clients this, just look overvalued?
0:36:08 So let’s start 30,000 feet and drill down.
0:36:22 First, you have that itch, and the advice we always give people with that itch is set up a separate cowboy account, put 5% or 10% of your money into it,
0:36:24 and pick stocks to your heart’s delight.
0:36:24 Who cares?
0:36:25 That’s no fun.
0:36:28 5% to 30, 5% to 10%.
0:36:29 All right.
0:36:33 Well, you know, you’re risking another 2,000 and 0,8, 0,9.
0:36:36 If you blow up 5% or 10%, who cares?
0:36:38 It hurts, but it’s not fatal.
0:36:40 So that’s number one.
0:36:46 Number two, sometimes stocks are expensive or cheap for a reason.
0:37:00 You could look back for the past 15 years, other than really briefly after the financial crisis, it’s hard to say U.S. stocks have been cheap any time in the past 10, 15 years.
0:37:02 They’re expensive for a reason.
0:37:04 It’s the highest profit growth.
0:37:16 It’s the best, or at least it was up until the craziness we’re dealing with now with tariffs and all sorts of other potential risk raisers.
0:37:25 But when you look around the world, Europe has a structural problem and has had that problem for a long time.
0:37:27 We have a lot of advantages.
0:37:28 We have the reserve currency.
0:37:35 You know, it’s not a coincidence that all of the big tech companies primarily start here.
0:37:41 I have a vivid recollection of a business trip in 2000 to London and Brussels.
0:37:47 And in the U.S. during the dot-com collapse, you walk down the streets in Manhattan.
0:37:49 The fear was palpable.
0:37:52 Shit, if I get fired, I lose my health care.
0:37:53 My kid can’t get that surgery.
0:37:55 Cobra is crazy expensive.
0:37:56 I’m screwed.
0:37:59 In Europe, it was kind of like, well, I got unemployment.
0:38:02 My student loans – I don’t have student loans.
0:38:03 My education is paid for.
0:38:05 My retirement is paid for.
0:38:06 My health care is paid for.
0:38:08 All right, so we have a recession.
0:38:08 Who cares?
0:38:18 The flip side of that is you don’t get the, you know, the Larry Ellisons, the Bill Gates, the Steve Jobs in Europe the way you get them here.
0:38:26 So sometimes stocks are cheap for a reason, and they can stay cheap for far longer than we would expect.
0:38:29 Ninety-eight is kind of a warning.
0:38:30 So that’s number one.
0:38:41 Number two, I’m not a fan of putting money into China because they basically say if you’re not a local Chinese investor, you’re a second-class citizen.
0:38:46 And I think the numbers are from 1989 to 2023.
0:38:49 You’re essentially flat in China.
0:39:01 I mean, you missed two of the greatest bull markets in history, and China gave you nothing because the B shares don’t trade the same way the A shares do.
0:39:04 And there’s a lot of friction, unlike in the U.S.
0:39:09 So I know everybody seems to think China is the big winner.
0:39:31 It turned out the way to get exposure to China was not through putting money into China, but buying Australia, who supplied a lot of energy, a lot of commodities, a lot of things to China, and did really well on a much more steady basis without the governments, the Chinese centrally planned government putting a thumb on it.
0:39:43 But the other aspect, and you and I have talked about what I’m about to say before, most investors never find their edge, right?
0:39:51 Ninety-plus percent of us, we have some idea as to what’s going on, but really not a full understanding.
0:39:54 We’re overconfident.
0:39:54 We’re arrogant.
0:39:59 We suffer from all the Dunning-Kruger effects, and so we make bad decisions.
0:40:05 But some of us, and I include you in that group, have an edge.
0:40:18 You have an expertise, digital marketing, content creation, look at your successful history on the entrepreneurship side.
0:40:38 If you can trade your expertise for entree into some of these alternatives where you’re getting a, hey, let’s swap, I’ll swap my, not charge you a fee and you don’t charge me a fee, that’s a tremendous advantage that you should be very comfortable taking advantage of.
0:41:06 When I, you know, I first found you because of your presentation on The Four, which eventually became the book, The Four, and it was clear to me that you had a huge insight into these companies, even as late as the early 2010s, I would say, check yourself and say, do I still have the advantage that I had when I bought these companies at a fraction of where they are today?
0:41:08 Let me ask you this.
0:41:15 There’s two big exogenous factors that I think you have to acknowledge and maybe adjust for.
0:41:21 And I’m curious how you’re adjusting your clients’ portfolios to these two opportunities, risk, whatever you want to call it.
0:41:32 The first is the Trump administration and all that brings kind of, you know, America first generously or tariffs, however you want to frame it, and two, AI.
0:41:36 How are you adjusting your clients’ portfolios based on those two factors?
0:41:39 So let’s start with AI first.
0:41:50 You know, and you and I are not that far apart age-wise, so we’ve lived through the financial crisis, we’ve lived through the dot-com implosion, what happened with the internet.
0:42:00 I think we’re both old enough to remember when computers, desktop computers first came out, and there’s this sort of land rush.
0:42:03 And by the way, this has happened with every technology.
0:42:10 Go back to telegrams, radio, telephones, computers, internet, AI is no different.
0:42:15 There’s a rush to try and find the winners, the NVIDIAs.
0:42:31 But what ends up happening is we’re not a dot-com company, but every modern company today has a website, has email, uses business intelligence and connectivity to make themselves more efficient, more productive, more profitable.
0:42:35 So with AI, the thought process is, is NVIDIA too expensive?
0:42:36 Is it too cheap?
0:42:45 When does Netflix and Microsoft and Apple, when do those companies achieve full value, overvalue?
0:42:47 I don’t know.
0:42:48 I have no idea.
0:42:52 People have been betting that it was over for forever, and they’ve been wrong.
0:42:56 To me, what makes AI so exciting isn’t the Magnificent Seven.
0:43:11 It’s the other 493 companies in the S&P 500 that every single one of them is going to be using artificial intelligence to make themselves more productive, more efficient, more profitable.
0:43:13 And that’s the upside.
0:43:16 Sure, NVIDIA is a $3 trillion company.
0:43:18 Is it going to be a $4 or a $5 or a $6 trillion?
0:43:21 I haven’t the slightest idea.
0:43:27 But I can tell you the rest of the S&P 500 is going to benefit from AI and become much more productive.
0:43:31 So that’s your second question first.
0:43:42 The Trump issue is kind of fascinating because there are two sides to this, and you have to be able to hold two conflicting thoughts in your head at once.
0:43:53 The first is if I’m investing for retirement, generational wealth transfer, philanthropy, I’m thinking out 10, 20, 30 years.
0:43:57 I’m certainly thinking out beyond 2028.
0:44:04 And so you have to kind of tune out the noise and look past all of the craziness that’s going on today.
0:44:10 But the flip side of that, and, you know, I’ve never met a one-handed economist.
0:44:12 It’s always on the one hand and on the other hand.
0:44:19 But the flip side of that is there can be no doubt that risks are rising.
0:44:34 This is a piece I put out last Monday, and we identified seven areas where the possibility of risks, they’re still low, but they’re higher than they were before January 20th.
0:44:45 And that includes the risk of a recession, the risk of a contraction in the economy, the risk of a volatility spike, which we’ve already seen.
0:44:51 We’re now over 23, which is a big, relatively higher number.
0:44:54 Not high enough to say, gee, I got to start buying with both hands.
0:44:56 But it’s above where we were.
0:44:57 That was kind of steady.
0:45:01 I’m concerned about the risk of the rule of law.
0:45:07 I don’t understand this nonsensical strategic crypto reserve.
0:45:15 The world using the U.S. dollar as the reserve currency of choice has been called America’s exorbitant privilege.
0:45:19 Why on earth would you do anything to put that at risk?
0:45:23 Sam, why is it put at risk with the Bitcoin reserve currency?
0:45:29 Why would you want to create an alternative to the dollar and endorse that?
0:45:37 You know, if you have an asset that’s enormously valuable, you don’t want to do anything to screw that up.
0:45:43 And arguably, I try and think of Bitcoin as like a large tech company.
0:45:48 It’s halfway between Facebook and Google, to put it into context.
0:45:52 At like a trillion, seven trillion, eight, it’s right in between the two of them.
0:46:01 Although Bitcoin came out a year or two after the iPhone, the iPhone is ubiquitous and indispensable.
0:46:07 We’re still waiting for Bitcoin to actually become an actual functionality.
0:46:18 But back to the question about Trump and tariff and layoffs that the federal government, you know, we’re sort of in a wait and see.
0:46:20 Will these things withstand judicial scrutiny?
0:46:25 Do they actually have the authority to not spend money that Congress authorized?
0:46:31 There’s a lot of questions, but you can’t just completely tune everything out.
0:46:35 You have to be aware we’re seeing risks rise.
0:46:38 We’re seeing the possibility of recession increase.
0:46:48 I’m not a giant fan of the various Federal Reserve GDP real-time measures before you get the quarterly update.
0:46:57 But the Atlanta Fed’s GDP now just printed yesterday negative 2.8% for Q on GDP.
0:47:04 That’s the first two months or so of data imply that we’re going to be in a contraction when all these tariffs
0:47:09 and all these layoffs get calculated in Q1.
0:47:11 That’s obviously a substantial risk.
0:47:18 You just can’t tell how much of this is negotiating, how much of this is going to go in effect.
0:47:23 We’re recording this 12 hours after the tariffs went into effect.
0:47:25 The first time they were postponed.
0:47:33 I’m hoping, I have a little wishful thinking on my part, that this will be negotiated away.
0:47:38 But in the meantime, you know, the market’s still within 5% of its all-time highs.
0:47:46 It’s a little early to panic, but it’s not too early to say, gee, this is starting to get a little more volatile and a little more choppy.
0:47:56 And lots of areas that have been pretty, you know, sedate and operating properly are now starting to tick up.
0:48:02 They’re still low, but they’re much higher than they were four weeks ago, six weeks ago.
0:48:05 We’ll be right back.
0:48:17 I’m Josh Muccio, host of The Pitch, where startup founders raise millions and listeners can invest.
0:48:25 For Lucky’s Season 13, we looked at 2,000 companies and selected 12 of the very best founders to pitch in Miami.
0:48:29 They flew in from all over the country and the world.
0:48:30 My name is Michele.
0:48:31 And I’m from Italy.
0:48:34 I’m originally from Medellin, Colombia.
0:48:36 I was born and raised in Maisel, Kentucky.
0:48:38 I’m from Baltimore, Maryland.
0:48:39 And I am from Finland.
0:48:44 This season, we’re diving even deeper into the human side of venture.
0:48:48 As these founders pitch the sharpest early stage VCs in the game.
0:48:51 I normally don’t like ed tech, but I really like you.
0:48:52 I echo those sentiments.
0:48:54 I do want to push back, though.
0:48:55 Puffing up there, lady.
0:48:56 That’s healthcare.
0:48:58 I feel like I’m the lone dissenter.
0:48:59 Ooh, Charles, spicy.
0:49:00 So I’m out.
0:49:04 I’m sure when they air this episode, they’ll be like, Charles was really dumb.
0:49:06 For those who can’t see, my jaw is currently on the floor.
0:49:08 Season 13 of The Pitch is out now.
0:49:13 Episodes are available to watch on YouTube or listen on your podcast player of choice.
0:49:16 So subscribe to The Pitch right now.
0:49:26 We’re back with more from Barry Ritholtz.
0:49:30 So I can’t help it.
0:49:35 I want to talk about individual theses looking for alpha and get your response.
0:49:40 I’m wondering, I’m trying to find the silver lining and basically America abandoning its allies
0:49:47 with respect to Ukraine and ignoring 80-year-old alliances with huge economies in Europe.
0:49:50 And I’m obviously laying bare my political bias here.
0:49:52 But it just seems insane to me.
0:50:01 And the silver lining I see is that the Europe is about to substantially increase its military spending.
0:50:10 And I see that possibly as a form of stimulus, not only economically, but it might inspire a decent amount of technology spillover into the private sector.
0:50:21 If you look at Israel spending on the military, I would argue that on the whole, you could argue in addition to the actual defense buttressing.
0:50:24 It’s been in many ways good for the economy long term.
0:50:31 I think of basically the most valuable companies in the world have just built a thick layer on top of technology innovation that originally came out of the defense sector.
0:50:48 Do you think that there’s a possibility, and this is me trying to talk myself into the fact that Europe becomes a union again, spends more on military, and that it kind of ignites through stimulative impact and kind of an inspiration in its tech sector,
0:51:03 that Europe might become a union, and this might kind of set off not only leadership, where they kind of command the space they own, largest economy in the world, take us a whole, but it might be a starting gun for kind of a bull run in Europe?
0:51:07 Or am I just painting a story to make myself feel better here?
0:51:16 So we have a tendency to think of the world in black and white and binary terms, and it’s never that clear cut.
0:51:23 It’s always nuanced and complex, and so you’re touching on a couple of really interesting things.
0:51:32 So let me caveat this by saying I am neither a defense expert nor a foreign policy expert nor a geopolitical expert.
0:51:34 Doesn’t stop me, Barry. Stop being so fucking measured.
0:51:37 Just make declarative statements.
0:51:42 Well, that’s where I was going with this, where I was going in one direction, but in the book—
0:51:47 Pretend we’re on CNBC. Just say shit like it’s God’s gospel.
0:51:53 So the funny part about what you’re saying is this chapter in the book called Epistemic Trespass,
0:51:58 and experts in one area have a tendency to believe that their expertise—
0:51:59 Dunning-Kruger, 100%.
0:52:06 Right. In fact, it was Professor Dunning who introduced me to Nathan Ballantyne at Arizona University,
0:52:15 who’s the expert on epistemic trespass. What happens when people with legitimate expertise in one area bleed over to another?
0:52:19 And the answer is exactly what you would think. They’re terrible in those adjacent spaces.
0:52:34 But all that said, I think the nuance of the realignment is such that Europe has been skating by under the NATO alliance and the American leadership and umbrella.
0:52:44 And while it certainly appears to be an unforced self-error, you know, your own accidentally own goal by giving that up, the United States giving that up,
0:52:49 It is going to make Europe much more cohesive, much tighter.
0:52:58 And whereas we used to be the counterpart, the offset to the Soviet Union, now Russia, Europe is going to become that.
0:53:00 So that’s the first part.
0:53:12 The second part that’s kind of interesting is an amazing article in the New York Times yesterday about not only how bloody and horrific the war in Ukraine has been,
0:53:24 But how over the course of three years, the casualties, the injuries and deaths are now 70 percent inflicted by drones.
0:53:36 The old regime of tanks and artillery and expensive aircraft has moved to a totally different type of warfare.
0:53:40 It’s no longer Lockheed Martin, it’s now Palantir.
0:53:42 It’s that sort of shift.
0:53:59 And so whereas we have whereas we have all of these legacy issues, those other companies and and to some degree, the new European alignment are not stuck with that.
0:54:08 And so it potentially can kick off a whole new wave of innovation, not just in defense, but other areas.
0:54:09 We see it in the U.S.
0:54:10 We see it in Europe.
0:54:22 I can’t imagine the United States is going to sit by and let Europe sell all these expensive, profitable weapons to everybody else.
0:54:25 They’ll they’ll have a lead if we back off.
0:54:31 And so it’s really hard to judge how any of these things are going to work out.
0:54:37 There’s always ramifications and unintended consequences and reflections.
0:54:39 It’s not just that.
0:54:45 I think I don’t know what’s going to happen geopolitically, but it’s never clean and neat.
0:54:52 There’s always so many variables, which is why predicting the future has become all but impossible.
0:54:55 A thesis, I want you to respond to this.
0:54:56 We talked about this when we were at dinner.
0:55:07 I’ve determined that the 0.1 percent all want to live in a handful of places, Dubai, London, New York, Palm Beach, Aspen, some in L.A.
0:55:09 And then I’m sure there’s one city in Asia I’m missing.
0:55:15 Do you think there’s a strategy or do you think it makes sense to invest or what I’ve been doing is I’ve been buying real estate in those places?
0:55:19 Do you buy into this 0.1 percent strategy as an investment thing?
0:55:29 Well, on the one hand, we just got the most recent data that says half of consumer spending in the United States are driven by the top.
0:55:32 Yeah, it’s bonkers.
0:55:38 And, you know, when you have a certain amount of money, you become pretty price insensitive.
0:55:45 I jokingly, if you’ve ever dealt with a contractor in the Hamptons, I’m assuming it’s the same in Aspen.
0:55:47 I know it’s the same in Manhattan.
0:55:48 Crazy time.
0:55:50 There’s a Hamptons tax that you’re going to pay.
0:55:51 It’s crazy.
0:55:58 And that’s the contractors know they can mark it up and say they they want a part of that.
0:56:00 That’s on the one hand.
0:56:16 What we talked about at dinner with the and we’ve talked about this for years, the widening inequality, both on the wealth side and the income side, although on the income side, it surprisingly got better post pandemic with a lot of Keynesian fiscal stimulus.
0:56:20 I mentioned unintended consequences earlier.
0:56:26 We weren’t all that far from a president, Bernie Sanders.
0:56:28 That that could have happened.
0:56:37 And as much as I see the far right sniping at AOC, it’s completely understandable.
0:56:40 We were never close to a president, Elizabeth Warren.
0:56:52 But but I think a president AOC is a genuine issue, at least for the point one percent you’re talking about.
0:56:57 And I’m not I’m not referring to the carried interest deduction or any of the other loopholes.
0:56:59 I’m talking about, hey, guess what?
0:57:01 There’s going to be a new tax bracket.
0:57:06 And if you make ten million dollars a year, there’s an alternative minimum tax and you’re going to pay it.
0:57:18 And so the risk with all this mania that that we’re seeing now is and the risk with wealth inequality is when the backlash comes.
0:57:32 So I don’t think the U.S. is ever going to become a socialist or communist regime, but we could go back to a 1950s or 60s era of taxation that look.
0:57:48 You look at the history of taxes over the past century, individual mom and pop citizens pay a much higher share today than they used to versus corporate America and the top 10, 1 or even 0.01 percent.
0:57:52 And don’t be surprised if that pendulum swings the other way.
0:57:58 I’m not smart enough to figure out an investment thesis for that five years down the road.
0:58:01 But it’s certainly a factor that should be considered.
0:58:09 Barry, you’ve literally interviewed 500 of the most successful investors or influential people in the world of finance.
0:58:12 I mean, you were sort of in this game of podcasting before it was cool.
0:58:18 What are the two or three things you’ve taken away, not only around investing, but kind of life lessons?
0:58:24 I have a few lessons or sayings that I’ve always held on to that have been nice guiding lights for me.
0:58:25 What have those been for you?
0:58:42 The single biggest one, which kind of surprised me, and I’m pretty alert to false modesty when people are bullshitting, blowing smoke up my ass, has been the role of luck and serendipity in people’s lives.
0:58:51 There were a group of fund managers who, as business school majors at Columbia, carpooled together.
0:58:54 And it was like a crazy Leon Cooperman.
0:59:05 And I’m trying to remember one of them told me like these four guys who all would go on to become billionaires were carpooling together at school.
0:59:21 And one of them had said, every person I went to school was as smart as me or smarter, was as hardworking or, or, but sometimes they just didn’t catch that break where they’re in the right place, right time at the right moment.
0:59:23 And things just fell their way.
0:59:29 And it, you know, if you hear it once or twice, it’s false humility.
0:59:29 Stop.
0:59:39 When you hear it a hundred times from people who are just wildly, wildly successful, that’s the, the first thing that really stood out.
0:59:43 Like luck really, Hey, listen, hard work and smarts.
0:59:44 Those are table stakes.
0:59:47 That’s just what it takes to enter the arena.
0:59:55 The second thing is, and this really took me a while to like the luck thing I got right away.
1:00:05 The second thing that really kind of surprised me is, uh, the concept of being grateful for what you have.
1:00:15 And look, if you want to be miserable, go to Zillow, circle the area around East Hampton or Amagansett and click sold.
1:00:20 And look at the houses that sold for 25, 30, 35, 40 million.
1:00:22 These aren’t outliers.
1:00:25 This is like every other fucking house is 10, 20, $30 million.
1:00:27 Your, your head explodes.
1:00:33 And your first instinct is to say, what the hell am I doing wrong in my life that I don’t have access to one of those.
1:00:38 And then the second thought is because you didn’t get lucky there.
1:00:48 You have a very nice house and a very nice car and a very nice, this, and that be grateful for what you have and stop comparing yourself to other people.
1:00:51 There’s always someone with a bigger boat.
1:00:56 If that’s your measure of success, you’re always going to be unhappy.
1:01:15 Instead, not to get, you know, Zen on you, but if you pre, you know, count your blessings, appreciate what went your way and be grateful for what you have, you’ll be much happier and enjoy life more than say somebody who is, you know, pretty consistently comparing themselves.
1:01:19 You know, hey, you’re Bill Gates, you were the wealthiest person in the world.
1:01:21 And then Elon Musk comes along.
1:01:30 If there’s always going to be somebody that’s going to surpass you, that should never be your measure of happiness and life satisfaction.
1:01:35 Barry Ritholtz is the co-founder, chairman, and chief investment officer for Ritholtz Wealth Management.
1:01:40 He’s also the host of Masters in Business, the most popular podcast on Bloomberg Radio.
1:01:45 Barry’s latest book, How Not to Invest, The Ideas, Numbers, and Behaviors That Destroy Wealth and How to Avoid Them.
1:01:47 It’s out next week.
1:01:57 This episode was produced by Jennifer Sanchez.
1:01:59 Our intern is Dan Chalon.
1:02:01 Drew Burrows is our technical director.
1:02:04 Thank you for listening to the Prop G pod from the Box Media Podcast Network.
1:02:09 We will catch you on Saturday for No Mercy, No Malice, as read by George Hahn.
1:02:15 And please follow our Prop G Markets pod wherever you get your pods for new episodes every Monday and Thursday.
1:02:17 We will catch you on Saturday for No Mercy.
1:02:17 We will catch you on Saturday for No Mercy.
1:02:17 We will catch you on Saturday for No Mercy.
1:02:17 We will catch you on Saturday for No Mercy.
1:02:17 We will catch you on Saturday for No Mercy.
1:02:18 We will catch you on Saturday for No Mercy.
1:02:19 We will catch you on Saturday for No Mercy.
1:02:19 We will catch you on Saturday for No Mercy.
1:02:20 We will catch you on Saturday for No Mercy.
1:02:21 We will catch you on Saturday for No Mercy.

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0:01:54 Welcome to Office Hours with PropG. This is the part of the show where we answer questions about business,
0:01:59 big tech, entrepreneurship, and whatever else is on your mind. If you’d like to submit a question,
0:02:04 please name my little voice recording to OfficeHours with PropGmedia.com. Question number one.
0:02:14 Hi, Prop G. This is Jake from Washington, D.C. I’m a big fan of all your podcasts. I think when it
0:02:18 comes to marketing and building businesses, you’re spot on. I also think you’ve come up with some
0:02:22 fantastic policy ideas that make sense, and I hope more moderate members of Congress reach out to you.
0:02:27 I’ve been thinking about your post-election analysis, where you discuss podcasts becoming
0:02:33 the dominant campaign medium in the next election, potentially replacing traditional door-to-door
0:02:40 outreach. This brings me to my question. How do you envision monetizing the monetization of political
0:02:45 campaigns on podcasts evolving? Are we going to be listening to you read, this ad was paid for by
0:02:50 Friends of Candidate X, as is required for all political ads? I’m curious to hear your thoughts on
0:02:56 how you think this emerging campaign medium will develop, and how would you maintain your authenticity
0:03:01 and credibility with your audience? Look forward to hearing from you, and keep up the great work.
0:03:06 Thanks for the thoughtful question, Jake from D.C. The 2024 cycle was the most expensive election in
0:03:14 American history, with political ad spending totaling over $11 billion. However, it wasn’t all disco for
0:03:20 broadcasters. This was the first election where their share of total spending fell below 50%. Since the
0:03:27 2020 election, ad spending increased over $2 billion. But traditional broadcasters only saw $100 million of this
0:03:31 growth. First off, I think it was Hearst, or one of the big family-owned media companies, was really smart.
0:03:35 About 20 years ago, they went and bought all these local TV stations in swing states, thinking,
0:03:41 okay, these are shitty businesses for about 20 months every two years. And then for four months,
0:03:45 they’re amazing businesses because they quintuple their ad rates and campaigns which think,
0:03:49 okay, old people vote. What do old people do? They want to watch the weather and see that handsome,
0:03:56 handsome young thing talking about the news. And they turn on their local news. And they can trap old people,
0:04:00 and they can run ads basically saying that, you know, the other guy is a pedophile and she’s
0:04:04 addicted to diet pills and you should vote for our guy. It’s really weird. Human condition. It’s much
0:04:08 easier for us to believe something negative about someone than something positive. So as Newt Gingrich
0:04:15 convinced his party 20 odd years ago, go negative, go early. Anyways, they bought these stations and
0:04:19 they’ve been the gift that keeps on giving. They were able to scoop them up fairly inexpensively
0:04:24 and they’re just cash machines. I think that is about to come to an end for two reasons. First reason,
0:04:29 Joe second Rogan. And that is when Trump went on Rogan, he got about 15 million downloads
0:04:37 on audio and about 40, 45 million views on YouTube. So call it 60 million. For Vice President Harris,
0:04:41 who by the way, totally fucked up and should have gotten on a plane. Joe Rogan is now more important
0:04:47 than her or was at that point to Austin and done an interview. I think Joe actually would have been
0:04:52 kind to her. He’s not about calling people out. He’s pretty good that way. As a matter of fact,
0:04:58 he doesn’t call people out enough. Oh, mRNA vaccines alter DNA. Really? Really? Oh, okay.
0:05:02 You’re not a fucking quack spreading misinformation that result in unnecessary death, disease, and
0:05:07 disability. Really? Oh, that makes sense. No, it doesn’t. Anyway, she should have done it. But for
0:05:17 for her to reach the same number of people, she would have had to go on CNN, MSNBC, and Fox every night for
0:05:24 three hours for an entire week. As a matter of fact, a woman I really respect a lot who has a, I believe
0:05:28 it’s a Sunday morning show on CNN, asked me to come on every week and do this thing like, what’s on your
0:05:35 mind? Where I talk for six to 10 minutes. And I said, I’ve done the math. No one 25 to 54 is watching CNN.
0:05:38 And for me to do the work I would need to do because I like you and I think you’re smart,
0:05:43 it’s just not worth, the juice isn’t worth the squeeze. And I would have killed to go on Anderson
0:05:49 Cooper or Michael Smirconish or Stephanie Ruhle. By the way, all three friends, all wonderful people
0:05:55 or any of these guys. I occasionally go on Chris Cuomo because I like, I only go on with my friends.
0:05:59 I know I’m name dropping right now, but it’s just not worth it. The people I’m trying to reach,
0:06:03 I’m trying to reach a young man. I’m trying to reach young people that want to develop economic
0:06:07 security. And guess what? They’re not walking. They’re not watching fucking CNN. Get this. The
0:06:14 average age, the average person watching MSNBC is a 70 year old white woman. Oh, but it makes sense for
0:06:18 politicians to go there. What do you think a 70 year old white woman has a made up her mind around who
0:06:24 she’s voting for? Having said that podcast, 34 year old male, 34 year old males, what do they vote on?
0:06:29 They don’t vote on issues or values. They vote on economics. They’re at a point in their life where
0:06:33 they’re trying to build economic security and the economic issue is more dynamic. What do I mean by
0:06:39 that? Every two or four years, it’s not entirely clear which party will become the party of economic
0:06:44 growth or become more favorable in the eyes of voters around economics. Traditionally, Republicans
0:06:48 are the business people, low taxes, but people are starting to pay attention that under Democratic
0:06:52 administrations, the last 50 years, there’s been 50 million jobs created. Under Republican
0:06:57 administrations, there’s been 1 million jobs. The markets tend to go up more during Democratic
0:07:02 tenure. So people are kind of saying, okay, whoever can sell me is going to get my vote at the age of
0:07:07 34 if they’re male. Whereas a 70 year old woman, so where is everyone going to go? I think to podcast.
0:07:12 Now, having said that, your notion is how do they monetize it or how do we monetize it? I don’t see why
0:07:16 it would be any more difficult to run a 30 second ad saying, he fucking sucks. And then having the
0:07:22 candidate go, I approve this ad. I think you’re going to start to see political ads. The reason I know
0:07:29 that this fear of influence is massively shifting, and I’m not exaggerating here. I bet 50% of the
0:07:35 candidates, mostly Democrat, but also Republicans, I’m seeing as somewhat moderate, have reached out to
0:07:40 me for quote unquote advice. When people reach out to me for advice, it’s not because they care about
0:07:45 what I think. It means they want help finding a job, they want money for their campaign, or they want to
0:07:51 come on the podcast. And I think that there’s probably a hundred senators and congresspeople
0:07:57 and governors who look in the mirror every morning and say the following, hello, Mr. President, or hello,
0:08:02 Madam President. And I’ve heard from most of them, and they claim they really are interested in my
0:08:05 advice. And they say, hey, wouldn’t it be a great idea for me to come on the pod and talk about it?
0:08:09 What’s interesting is the political candidates don’t do well on podcasts. People would much rather hear
0:08:17 from, I don’t know, Kim Kardashian, or a guy like Freed Zakaria gets unbelievable downloads.
0:08:22 Yeah, he does so well. Anthony Scaramucci does incredibly well. He’s not a political candidate,
0:08:27 but he’s a political commentator. Ian Bremmer, these geopoliticians, Josh Brown on the markets,
0:08:33 Aswad Damoner, and Kyla Scanlon, a young person on the market. These people get huge downloads. Mel
0:08:38 Robbins, I had her on, people love talking about emotions and raising their kids. When I bring
0:08:46 senators or congresspeople on, people just don’t care. It’s really interesting. But I am committed
0:08:52 to bringing more and more politicians on, specifically moderates on the left and on the right, although
0:08:58 I’m having trouble finding moderates on the right. I’m a moderate, but that wasn’t a Nazi salute. Yeah,
0:09:04 okay. Okay. What are your pronouns, he and Himmler? Anyway, I do think that if you get attention,
0:09:08 you can monetize it. And if you have attention and influence, which podcasts will have,
0:09:15 they’re going to be able to grab a disproportionate amount of that, what it’ll probably be 15 or 20
0:09:19 billion going into the next election. So if you have influence and attention, you’ll figure out a way
0:09:24 to monetize it, whether it’s ads, sponsored events, I don’t know, what have you. But we’re going
0:09:29 to see, I think we’re going to see for the first time, these local news stations start to feel some
0:09:33 of the same pressure that every other media company has felt. And then we’re going to see a massive
0:09:40 transfer of influence, attention and monetization to podcasts. In terms of conflict of interest, I read
0:09:45 ads. I don’t do crypto ads anymore because I worry it’s gambling and I worry there’s too many young men
0:09:52 staring at their phone, losing money or making money on crypto. But I have no problem advocating for
0:09:56 products. And if it’s a conflict, if I’m talking about a company, I’m an investor and I try to be
0:10:01 transparent. I’m here because I enjoy this, but I am a close second here because I want to make money.
0:10:06 And I don’t think people mind that. So what I think they mind is when they feel like you’re abusing
0:10:11 their trust and not being upfront about your intentions or your investments. So as long as
0:10:16 you’re transparent, I think that’s fine. But coming your way, I’m Joe Bob and I approve this ad.
0:10:20 Thanks for the question. Question number two.
0:10:27 Hey, Prof G. Love your show. Question for you. What advice do you have for federal workers considering
0:10:34 leaving public service? As you know, the DOGE efforts are cruel and chaotic. They’ve created a
0:10:40 stressful work environment that leaves me full of anxiety. Wondering if I’ll be the next to lose my job.
0:10:45 I joined the federal workforce as a military spouse five years ago. Prior to that, I spent my career in
0:10:52 the private sector. Despite high evaluations, leadership programs, and a graduate degree,
0:10:58 I’m still concerned I could lose my job. I live in Virginia with a high concentration of federal workers.
0:11:05 Should I jump ship before the job market is oversaturated? Should I stay put? Am I overthinking
0:11:10 this? I’d love to hear your thoughts. Anonymous for Virginia. The first is, I’m really sorry you’re
0:11:16 being, you’re stressed out. It’s sort of the unknown sometimes is more stressful than the actual known. And
0:11:22 that is a means of, I think, trying to assuage your stress. And there’s the basics, spending time with
0:11:29 loved ones, working out, meditation, breath work. I tried breath work. I tried this straw method from this
0:11:34 guy named Dan Reeves, who I love, who’s fantastic, this very soulful guy who does this 10% happier
0:11:40 podcast. Here’s the straw method. Breathe in. Two seconds. Then breathe out.
0:11:50 Four seconds. Okay. That shit does not work for me. It does not work for me. The breath work does not work.
0:11:58 I understand that you’re stressed out, but anytime there’s change or chaos, there is a silver lining, and that is
0:12:04 sometimes there’s opportunity where you don’t see it. What do I mean by that? What is happening in the federal
0:12:09 government level right now? I’m of two minds about it. The first is, to be blunt and coarse, welcome to
0:12:14 the work week. The idea that you get a random email from someone who might be laid off and have insecurity
0:12:21 and anxiety, people feel that across every business sector in America. In America. At the same time,
0:12:27 the injustice I get, but there’s tons of injustice in the private sector. The thing that I find most
0:12:33 troubling about it is not what people, most media is reporting on. It’s the incompetence. It’s laying off
0:12:37 workers who oversee our nuclear stockpile and then rehiring them thinking, oh, maybe we should,
0:12:42 in fact, look after this shit such that it doesn’t, you know, such that we can ensure that nobody,
0:12:47 the babies don’t start playing with it before it becomes less radioactive in 60,000 odd years.
0:12:52 The way they’re going about it, it just feels stupid and ineffective to me. And also the corruption,
0:12:59 firing people that happen to be investigating Musk’s business dealings, and also just the general
0:13:05 incompetence. Oh, we saved $8 billion. Well, actually, it’s $8 million that you saved. Oh,
0:13:10 we’re saving a million and a half dollars here. No, you’re not. They already spent the million and a
0:13:16 half. There’s no way to get it back. So I find the whole Keystone Cops fucking incompetence that
0:13:21 doesn’t reflect the general competence you find across most government agencies. I think I’m sort of of
0:13:27 that attitude of let them. I think it’s just so weird that the genius of the Republican Party is its
0:13:32 ability to convince people who are going to get hurt the most that this is a good idea for them. In
0:13:39 general, the reddest districts are the ones that are the biggest takers. The Department of Education
0:13:46 sends the most money per capita to these deep red states in the South. Okay, you want to eliminate the
0:13:53 Department of Education? Fine. You want to eliminate Medicare or take money out of Medicare where six in
0:14:01 10 kids in poor households in red states get the medical treatment they need? Okay, have at it. Let
0:14:06 them. You’re about to see just how incompetent you think government really is and when these cuts come
0:14:13 home to you. So I’m sort of of the attitude of, okay, you wanted it, you broke it, you own it.
0:14:21 Now, coming back to your specific situation, one, until you actually get laid off, unless it’s never
0:14:25 a bad idea to do a market check, see what’s out there, start investigating, start having coffees,
0:14:32 do interviews if you have ideas on who you want to speak to. I don’t think that’s a bad idea in any
0:14:37 situation to be kind of on a regular basis doing a market check. Having said that, I would not jump,
0:14:42 I would certainly not quit until you have another job. And also, a couple things can happen. One,
0:14:47 if you do get laid off, you’ll probably get some sort of severance. And two, when there’s change,
0:14:51 say they left 10 or 20% of the people at your organization, they’re pretty soon going to
0:14:55 realize they need people to actually run the fucking organization. And the top of the pyramid
0:15:01 will, quite frankly, get broader. And that is, you might find that you’re in a position to be
0:15:05 promoted sooner than you thought because there’s fewer people around. I’ve always told people when
0:15:09 there’s a transaction in the private sector, when their company gets acquired or there’s layoffs,
0:15:16 stick around because churn and chaos results in a lot of anxiety, oftentimes a lot of negative things,
0:15:22 but oftentimes a lot of opportunity because the company is being reconfigured and you might wake
0:15:29 up with a bigger and a better job. So in sum, find things and people that help manage your anxiety.
0:15:33 Two, it’s never a bad idea to do a bit of a market check and talk to people. And three,
0:15:39 think to yourself, what could go right? Right? We’re always about what could go wrong. Well,
0:15:44 what could go right? Maybe the organization, maybe people get laid off, maybe you’re good at what you
0:15:50 do, and maybe it ends up creating more avenues or arteries of opportunity for you. I appreciate the
0:15:55 question, Anonymous from Virginia. We have one quick break before our final question. Stay with us.
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0:19:28 Welcome back. Question number three.
0:19:34 Hey, Prop G, this is John Ward from Los Angeles. I took a marketing class from your company, Section,
0:19:40 a couple of years ago, and it was called Section 4 and really enjoyed it. Can you give us an update
0:19:45 on the company? Has it gone as expected? What’s working? What’s not? Have you taken more money?
0:19:51 Just really interested in that as an entrepreneurial journey and what’s going on with that company.
0:19:52 Thanks so much.
0:19:57 John from LA. Thanks for the kind words. I pride myself on being transparent. Everybody talks about
0:20:03 their wins and people don’t want to talk about their failures. Section is still got a question mark around
0:20:09 it. And that is the initial vision was find, build this all-star team of the best professors at business
0:20:15 schools and offer 80% of an amazing class. At every business school, there’s five or six ringers that
0:20:19 everybody has to take regardless of what they’re teaching because they’re so good. My thought was,
0:20:25 I’m going to aggregate all these ringers from the top 20 schools, put them online, really highly invest in
0:20:32 marketing and graphics and production quality, and give you 80% of the valuation class from Demodaran or from
0:20:41 Adam Alter’s marketing class or, God, I forget his name, this wonderful guy from Kellogg, Sarah Beckman from the
0:20:48 Haas School, and give you 80% of her course for $1,000 instead of $7,000, which is what it costs to take these courses at a
0:20:54 private university. I’m not sure if that’s true at the Haas School. Anyways, in sum, it wasn’t working. We were
0:20:58 spending a lot more money, and without the certification you get from an MBA, we had trouble
0:21:05 charging even $1,000. We got this incredible sugar high of COVID, and that is I put in, I raised a seed
0:21:13 round of $7 million. I put in, I think, $2 million of my own money, maybe $3 million, and it just took off
0:21:17 during COVID because everyone had a lot of time. And I knew that we were in a sugar high, but I didn’t realize we
0:21:22 were in like a speedballed meth cocaine high. And the company went from like $1 to $10 million overnight.
0:21:28 I went out, and I raised another $30 million. That was a mistake. I should have kept it small. I should
0:21:31 have been more judicious with the capital because once we had $30 million, we brought in a management
0:21:36 team, and they started spending money like fucking drunk sailors on shit that didn’t work. We hired
0:21:40 Malcolm Gladwell to speak to our audience for $100,000, or Adam Grant, who I love and think it’s great.
0:21:46 We paid him $100,000. They’re not worth that much money to speak to a bunch of prospective students, as good as they
0:21:52 are. So we were just wasting money. We went from 20 employees to 120. And here’s the mistake I made that I
0:21:59 continue to make in the private markets. And that is once I have access to capital, I try and grow too fast. I spend way
0:22:06 too much fucking money hire mediocre people and then end up having to lay off 60 or 80% of them. And that is what
0:22:13 happened here. As soon as we came out of COVID, revenues crashed, our burn was unsustainable, and we had to lay off
0:22:20 60, 70% of the staff. Now the company is about 25 or 30 people. We have pivoted to AI. What do I mean by that?
0:22:28 We found a lot of people and companies coming to us and say, could you upskill our media department at
0:22:34 L’Oreal on how to use different AI tools to make our department much more robust, give us this great…
0:22:39 L’Oreal has always had amazing media buying. That’s kind of, I would argue, their core confidence is
0:22:44 they’re just fantastic media buyers. And they said, how do we take the most cutting-edge tools and turn
0:22:49 every media planner or every media buyer into a warrior and make them just much better at what they do?
0:22:54 So we have pivoted section to basically AI upskilling for the enterprise.
0:23:00 And this is more my ballywick. I’ve always done B2B businesses. I’ve never done B2C.
0:23:05 I like B2B more. It’s based on individual relationships. Corporations, if you can move
0:23:09 the value or move the shareholder needle for them, are much less price sensitive
0:23:14 than consumers. I’ve just always been in B2B businesses. Anyways, we pivoted.
0:23:18 Really wonderful investors. General Catalyst is my lead,
0:23:23 and they’ve been incredibly supportive and nice and smart. And I have a good CEO, Greg
0:23:27 Shove, running the business now. We have some very talented people in the organization,
0:23:32 and it is starting to grow again. And we are now, I think, almost two-thirds subscription
0:23:37 revenue, back towards a $10 million run rate and working with very large corporations,
0:23:43 helping them, again, upskill certain departments within their organization around how to leverage these
0:23:50 new AI tools. So I’m hopeful, but the last five years have been really mediocre. I have wasted a ton
0:23:55 of time and money. Is that fair? Not wasted. Have not gotten the return I was originally hoping for.
0:24:00 I would bet, if I had to bet what’s going to happen, there’s an outside shot. It does really well. I think
0:24:04 there’s a good shot. We’re going to get our money back. Keep in mind, we’ve raised $38 million,
0:24:10 so I need to get my investors $38 million back before we start really showing any return. I’m
0:24:15 fairly confident. Is that right? I think I’m fairly confident that’ll happen. And we seem to finally
0:24:19 have found our footing. Having said that, this is kind of the story of my life in most of these
0:24:23 companies. I’ve had a couple companies where it’s just been up and to the right. But usually,
0:24:29 I start something, it does okay, then it doesn’t do okay. And the key is agility and kind of zero in
0:24:36 on something that works. And I think we have finally done that after five years and spending 25 or $30
0:24:42 million. I think we finally zeroed in on something. They’re signing up corporations and it’s actually
0:24:50 doing quite well and growing again. But this is, you know, this shit is hard. This is chestnut
0:24:55 checkers. But it’s finally, it seems to me kind of on its, found its footing again and doing
0:25:04 really well. But again, one out of seven companies succeeds. I’ve started nine. I’ve had two do really
0:25:08 well. I’ve had two or three just do okay. And I’ve had four just like flaming balls of shit hit a giant
0:25:14 wall and spray and everyone gets their face burned off. That was a little graphic. That was a little
0:25:19 graphic. Anyways, thanks for the question. I hope that satisfies your need to understand what is
0:25:28 happening at a section and it’s now called section AI. That’s all for this episode. If you’d like to
0:25:32 submit a question, please email a voice recording to officehours at propgmedia.com. Again, that’s
0:25:35 officehours at propgmedia.com.
0:25:47 This episode was produced by Jennifer Sanchez. Our intern is Dan Chalon. Drew Burroughs is our
0:25:50 technical director. Thank you for listening to the Prop G pod from the Vox Media Podcast Network.
0:25:56 We will catch you on Saturday for No Mercy, No Malice, as read by George Hahn. And please follow
0:26:01 our Prop G Markets pod wherever you get your pods for new episodes every Monday and Thursday.

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0:01:17 Thumbtack presents the ins and outs of caring for your home.
0:01:23 Out, procrastination, putting it off, kicking the can down the road.
0:01:29 In, plans and guides that make it easy to get home projects done.
0:01:32 Out, carpet in the bathroom.
0:01:34 Like, why?
0:01:39 In, knowing what to do, when to do it, and who to hire.
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0:01:51 Welcome to Raging Moderates.
0:01:52 I’m Scott Galloway.
0:01:53 And I’m Jessica Darla.
0:01:54 Jess, how are you?
0:01:54 I’m great.
0:01:55 How are you?
0:01:56 I’m good.
0:01:59 I’m in the great state of Texas at South by Southwest.
0:02:00 I’ve been seeing on social.
0:02:01 You’re all over.
0:02:02 Really?
0:02:03 Oh, your own social.
0:02:04 Your team’s doing a great job.
0:02:06 I’m all over.
0:02:07 I just love me.
0:02:14 I did a big, when I went on stage yesterday for Pivot, I danced around with my belly hanging out, screaming.
0:02:15 That was a big hit.
0:02:15 Yeah?
0:02:16 That was a big hit.
0:02:20 Yeah, no, mockery is always, the algorithms love mockery.
0:02:20 It’s true.
0:02:22 The algorithms are pretty mean.
0:02:26 And they were mean, actually, even before Elon Musk, but meaner now.
0:02:27 And what have you been up to?
0:02:29 How’s your, or how was your weekend, I should say?
0:02:30 Oh, it was great.
0:02:30 It was my birthday.
0:02:34 Yesterday, I was in Jamaica, sans children.
0:02:36 So we finally got away.
0:02:37 And it was fabulous.
0:02:41 I had, my husband loves Jamaica, always has.
0:02:43 I have never, had never been.
0:02:44 And he loves Jamaica?
0:02:46 He’s obsessed with Jamaica, him and his friends.
0:02:50 Yeah, it’s, it’s a pretty amazing place.
0:02:54 But we went to Goldeneye, Ian Fleming’s old house.
0:02:56 And now Chris Blackwell, who started Island Records, owns it.
0:02:57 I’ve heard it’s great.
0:02:59 Oh, it’s fantastic.
0:03:01 And it feels completely empty.
0:03:04 Like, we were wondering the whole time if there were other people around.
0:03:07 And there was a happy hour, which saw like 20 people at.
0:03:09 And that was the max the whole time.
0:03:11 So it was very cool and secluded.
0:03:14 And my best friend has the same birthday as me.
0:03:17 We met in preschool and she came with her husband.
0:03:18 They live in Florida now.
0:03:19 So it was cool.
0:03:22 And you’re, you’re 37, 38?
0:03:23 No, the big four ones.
0:03:26 So seven years until my midlife crisis, according to you, right?
0:03:31 Where I started traveling only with my girlfriends and dancing with my belly out.
0:03:35 But the good news is, is that for men, 50 is the new 30.
0:03:36 And for women, 40 is the new 80.
0:03:38 I haven’t heard that one before.
0:03:38 That’s good.
0:03:39 It’s not really.
0:03:40 It’s upsetting.
0:03:41 But thank you.
0:03:42 That’s good.
0:03:44 Yeah, that’s, that’s, there’s a term for that.
0:03:44 New York.
0:03:45 All right, enough of that.
0:03:46 Let’s get into it.
0:03:51 President Trump sent financial markets into a tailspin last week.
0:03:54 Today, we’re going to talk about Trump backtracking on tariffs.
0:03:59 Representative Al Green getting censored for protesting Trump’s trying to address what Governor
0:04:01 Newsom really thinks about trans rights.
0:04:05 And James Carville’s surprising advice to Democrats, do nothing.
0:04:12 So markets kind of very volatile this week or last week with this ever-changing trade policy.
0:04:17 On Thursday, he delayed tariffs on goods from Canada and Mexico, giving industries a brief
0:04:22 bit of relief, but on Friday, he was back on offense, threatening new tariffs on Canadian
0:04:27 lumber and dairy, claiming Canada has been ripping us off for years.
0:04:32 The back and forth has left businesses scrambling and critics warning of economic fallout.
0:04:37 Jess, how did these sudden shifts in trade policy impact businesses and global markets?
0:04:38 Really badly.
0:04:44 And the strangest part to me has been how little he seems to care.
0:04:48 Because he was totally, like, live by the market, die by the market.
0:04:51 And he’s taking a very laissez-faire attitude towards it.
0:04:53 He was interviewed by Maria Bartiromo.
0:04:58 And she was asking him about this because, you know, business anchors, no matter their
0:05:03 partisan affiliations, have been freaking out over the last week with the Canada and Mexico
0:05:05 25 percent threat.
0:05:10 And he went with the, like, there could be a little bit of pain or, you know, maybe we’ll
0:05:13 see a recession and kind of shrugged it off.
0:05:17 And Howard Lutnik is out there, you know, doing his best dancing around it.
0:05:18 Like, we’re all going to be fine.
0:05:19 And Scott Besson, we’re all going to be fine.
0:05:27 And Trump seems oddly comfortable to me with whatever the fate of the market or the American
0:05:31 economy is going to be as a result of these policies that he hasn’t done a particularly
0:05:33 good job in defending.
0:05:39 And I’ve been thinking a lot about the difference between the first Trump term and the second
0:05:44 Trump term and how the chaos of this term is actually what we thought would happen the
0:05:45 first time.
0:05:49 But it was remarkably calm on a comparative basis.
0:05:54 And how central to that calmness Steve Mnuchin actually was.
0:05:57 And I thought, like, oh, is this something that people are thinking about?
0:05:59 So I started keyword searching for Mnuchin.
0:06:05 And I see that there are a lot of people who are talking about what a good Treasury Secretary
0:06:08 he actually was and that he managed to stay under the frame.
0:06:13 And he had a few incredible photo ops and things like that with his wife holding all the money,
0:06:13 et cetera.
0:06:16 But that he was really an even hand.
0:06:22 And there was someone who pointed out how Trump 1.0 put two of the best financial bureaucrats
0:06:24 in power, Jerome Powell and Steve Mnuchin.
0:06:27 And then Trump 2.0 hired knuckle dragging cultists.
0:06:30 And I thought that summed it up pretty well.
0:06:33 Yeah, it’s really it’s almost getting a little bit comical.
0:06:38 I think a key to these negotiations is it’s really difficult to even understand what he wants.
0:06:41 When I think about he says, OK, Canada has been ripping us off.
0:06:44 It’s it’s hard to exactly discern what it means.
0:06:48 And then he’ll go to, well, they need to stop shipping fentanyl across the border.
0:06:50 And that might might be true of Canada.
0:06:50 It’s not.
0:06:55 It might be true, excuse me, of Mexico and China, or you could at least make a philosophical
0:06:55 argument.
0:06:58 The amount of fentanyl that’s coming across the Canadian border, I think, could fit in a
0:06:59 backpack.
0:07:01 It’s less than one percent of the fentanyl that comes into the nation.
0:07:07 And in addition, we’re now at a point where I don’t even know if the tariffs are on or off
0:07:12 based on what hour it is, where people are going to start clearing the shelves or developing
0:07:17 alternative supply chains and alternative alliances, regardless of whether he takes the tariffs
0:07:20 off again, because we just have no credibility.
0:07:26 And the Atlanta Fed tracker, or they basically have a mechanism for predicting GDP growth, has
0:07:30 gone from positive four percent to negative two point eight.
0:07:34 Consumer sentiment has had its largest fall since COVID.
0:07:38 The economy is contracting at its fastest rate since the lockdowns.
0:07:43 It’s just really difficult to understand what the endgame here is.
0:07:47 If he’s putting this out to try and accomplish some big, beautiful deal that it can take credit
0:07:51 for it, any thoughts on what’s motivating the administration right now?
0:07:53 Well, he has always loved tariffs.
0:07:56 Like, the McKinley obsession is legit.
0:08:03 And he can, at certain moments, wax quasi-lyrical about the beauty of tariffs and McKinley.
0:08:07 And, you know, we have Mount McKinley now in Alaska as well.
0:08:11 So I think there is a fundamental affection that he has.
0:08:14 And that’s not to say that all tariffs are bad.
0:08:19 And I saw, actually, your markets co-host, Ed, pointed this out.
0:08:23 There was an op-ed in The New York Times by a Rust Belt Democrat, Chris DeLuzio.
0:08:29 It’s he replaced Conor Lamb, who also ran in the Senate primary against John Fetterman.
0:08:37 And he wrote a piece defending tariffs and saying that anti-tariff absolutism is not good policy.
0:08:43 And there was a very strong argument to make that we need some protectionist tariffs, even
0:08:48 when it comes to Canada and Mexico, to make sure that we are producing things at home, that
0:08:52 people can earn a good wage, which I know is fundamental to what you’re doing with that
0:08:54 Project 2028, which I think is so cool.
0:08:57 And I was pretty taken with his argument.
0:09:01 And he mentioned how we’re all OK with the China tariffs, right?
0:09:06 So Trump had the 10 percent tariff on China, and Biden actually tripled it when it comes
0:09:07 to steel and aluminum.
0:09:12 And we get basically all of our construction supplies from Canada, including a lot of steel
0:09:15 and aluminum, plus a ton of cement and lumber.
0:09:23 So why I’m not saying a 25 percent tariff, but using the same logic that we do against
0:09:29 China, which is obviously an adversary versus a friend, but there’s some good economic policy
0:09:30 to it, right?
0:09:33 We’re not just punishing China because it’s run by an authoritarian and they’re terrible
0:09:34 on human rights.
0:09:37 There’s a reason we’re trying to protect the American worker there.
0:09:40 So why wouldn’t we think about maybe like a five percent, right?
0:09:41 Or a 10 percent?
0:09:46 Yeah, so my understanding of tariffs is that they do make sense when they’re used as a
0:09:50 weapon to try and restore asymmetry and imbalance in trade.
0:09:55 If the U.S. doesn’t have access to the Chinese auto market, then fine, you want to bring your
0:09:56 cars over here, we’re going to tariff them.
0:10:00 You might want to protect certain key strategic industries.
0:10:03 The steelmaking industry, you can make an argument for, we need to at least have a few
0:10:10 mills kind of always fired up such that if we need to make tanks or our primary source
0:10:14 of steel goes dark, like what happened with Putin and oil in Germany, we’re not caught
0:10:15 sort of flat-footed.
0:10:22 But just a sweeping tariff at these levels is nothing but an increase in costs.
0:10:28 I read that the average car, should these tariffs hold, is going to go up in price somewhere between
0:10:29 $8,000 and $12,000.
0:10:36 The way cars are manufactured is you actually have certain parts that leave Lansing, Michigan,
0:10:41 go to Canada, have work done to them, then go all the way down to Mexico, have more work
0:10:45 or assembly, and then come back to Lansing, Michigan for assembly at a Ford plant.
0:10:50 Some of these, some of the parts used to assemble a car go back and forth a half a dozen times
0:10:51 across borders.
0:10:54 So $8,000 to $12,000 increase per car.
0:10:58 They’re talking about an average increase per household of $1,200.
0:11:01 I mean, this is, this is really weird.
0:11:08 And even more so than the actual tariffs is the sclerotic reputation we’re establishing.
0:11:12 Because even if you decide, okay, we’re going to do a deal and we’re going to come to some
0:11:14 sort of accommodation that works for both.
0:11:18 You know, who can trust that we’re actually going to do what we said we’re going to do?
0:11:23 We’re now talking about, supposedly Trump wants Iran to think about another, another deal.
0:11:30 We’re, we’re shutting off intelligence to Ukraine and then they bomb a hotel where Americans are.
0:11:33 We, we talk about putting it back on and putting sanctions back on Russia.
0:11:39 I mean, it’s just the world economic policy is being run on this guy’s blood sugar level
0:11:45 at that moment, which means that if you’re going to base billions or if you’re the EU or
0:11:51 trillions of dollars in trade and alliances and supply chain on one man’s blood sugar, you
0:11:55 decide, no, I’m going to just have workarounds, even if they’re more expensive.
0:11:57 It’s just the automobile industry right now.
0:12:03 I’m at South by Southwest and a key theme here when I talk to advertisers is that their
0:12:05 advertising business is down.
0:12:07 I mean, this has so many ripple effects across the economy.
0:12:11 Their advertising business is down because some of the biggest advertisers are automobile companies
0:12:14 and they literally are just, we don’t know what to do.
0:12:19 We’ve paused all marketing and spending because as far as we know, we’re not going to have
0:12:22 cars on a lot and we’re just not sure what’s going to happen.
0:12:23 So they can’t even plan.
0:12:27 If the tariffs were absolutely going in, they would say, okay, we need to plan our business
0:12:27 model.
0:12:31 We’re going to raise prices, find alternative routes or supply chain, but they would have
0:12:31 a business plan.
0:12:35 Right now, this is the worst of all worlds.
0:12:36 I think that’s what Eisenhower said.
0:12:39 The wrong decision is bad, but no decision is worse.
0:12:43 And there are entire companies who have to make essentially no decision because they don’t
0:12:45 know what environment they’re going to be operating.
0:12:50 Yeah, well, Trump backed off of this round of tariffs because the CEOs of the major car
0:12:52 companies reached out to him, right?
0:12:53 And called and said, you can’t do this.
0:12:57 I mean, it’s $8,000 to $12,000 extra for a regular car.
0:12:59 It’s $20,000 for a truck.
0:13:05 So anyone who’s actually using their car for work is facing an extra $20,000, which is obviously
0:13:05 unaffordable.
0:13:07 I agree with what you’re saying.
0:13:11 I don’t think that it means that tariffs aren’t going to end up being a tax on the consumer.
0:13:16 A majority of Americans know that I think it could go up to $1,800 actually per annum,
0:13:21 per family, the cost of these if they’re implemented in the way that they’re being
0:13:22 posed or pitched.
0:13:30 But the result that I’m seeing most clearly from the wobbly or frenetic nature of this
0:13:35 administration is that our allies are getting stronger on their own.
0:13:39 So you look at Claudia Scheinbaum, who I think has been great in handling President Trump.
0:13:41 She has an 85% approval rating.
0:13:45 Do you know of any world leader with an 85% approval rating who isn’t like Vladimir Putin
0:13:46 has fake polling?
0:13:47 The queen.
0:13:48 I don’t know.
0:13:48 You’re right.
0:13:49 That’s insane.
0:13:50 It’s remarkable.
0:13:56 And also for a female head of state, right, on top of it, which I wouldn’t expect.
0:13:57 A Jewish climate scientist.
0:14:04 A Jewish climate scientist lady has an 85% approval rating in Mexico during a time when
0:14:09 dealing with one of the more xenophobic American presidents in history.
0:14:10 Which is crazy.
0:14:11 It is crazy.
0:14:16 Or like Mark Carney, who’s going to be the new prime minister of Canada, won the race to be
0:14:21 head of the Liberal Party over the weekend, has no technical political experience, but he
0:14:24 was a central banker, which is why people picked him.
0:14:28 And he went after Trudeau consistently about how poorly he had handled the economy.
0:14:33 And the major thing that he said was, you need someone who can steer Canada through this
0:14:34 war with America.
0:14:40 When would you ever think that that would be a platform that a Canadian premier would
0:14:41 have to run on, right?
0:14:46 This idea that we are going to be at war with our neighbor, that we are on incredibly friendly
0:14:50 terms or, historically speaking, have been on incredibly friendly terms with.
0:14:51 So that’s happening there.
0:14:55 You look at the European countries that are building up their own defense.
0:14:59 They’re thinking about, you know, what nuclear arsenal can they get to to help with sharing
0:14:59 there?
0:15:04 We’re cutting off the intelligence sharing with Ukraine at this moment.
0:15:06 They’re being embraced by Europe.
0:15:11 We’re on the wrong side of everything with that vis-a-vis cozying up to Putin.
0:15:17 And I see everybody else getting a lot stronger while we’re getting weaker at home and abroad.
0:15:18 Yeah, it really is.
0:15:20 It’s very difficult to understand the trade.
0:15:22 And the trade right now at a very macro level is the following.
0:15:29 We’re basically trashing and fraying and making much more brittle and fragile these 80-year
0:15:34 alliances with the world’s largest economies that, through free trade, cooperation,
0:15:39 coordination, general goodwill, cooperation towards each other, lower costs for Americans,
0:15:41 and increase the sales of our products abroad.
0:15:45 And now these nations are just going to figure out different alliances.
0:15:48 And even if we go back and say, hey, just kidding.
0:15:49 We didn’t mean it.
0:15:50 Love you.
0:15:52 Come down to Mar-a-Lago.
0:15:53 They’re going to say, sorry, boss.
0:15:54 You’re just not a reliable partner.
0:15:58 I don’t know who I’m waking up next to.
0:16:00 And for me, everything comes back to high school.
0:16:05 And then as I saw this fantastic study that attempted to figure out and get to the bottom
0:16:08 of why popular kids were popular.
0:16:11 So they looked at the most popular kids in high school.
0:16:12 Were they the best looking?
0:16:12 No.
0:16:14 Were they the best athletes?
0:16:14 No.
0:16:15 Were they the smartest?
0:16:16 Again, no.
0:16:20 The thing they had in common was they liked the most other people.
0:16:26 They were that kid that would, going down the hallway, would yell, hey, you know, Lisa,
0:16:27 Jim, good to see you.
0:16:28 What’d you do this weekend?
0:16:32 And was confident enough to like other people that those were the most popular kids.
0:16:38 And I read this data showing that about three quarters of Americans feel pretty good about
0:16:38 Canada.
0:16:40 They’re like, yeah, Canadians, go on.
0:16:44 But now two thirds of Canadians don’t think of us as an ally.
0:16:49 They have really been, I don’t want to use the word traumatized, but really feel, quite
0:16:51 frankly, just poorly treated.
0:16:56 And it’s not like they’re going to get over that in six or even 12 months.
0:17:00 We are basically saying to the world, we’re going to be the least popular kid.
0:17:05 And as a result, have fewer alliances, fewer treaties, less cooperation, because we’re acting
0:17:07 as if, you know, we think you’re a fucking idiot.
0:17:14 And where we keep yelling expletives or hurling insults at the other kids, you know, rolling
0:17:15 by us.
0:17:19 And the next day we don’t, the kid doesn’t even know what we’re going to say about that
0:17:19 kid.
0:17:25 We’re just so unpredictable and big and flexing our power and flexing our muscles and just being
0:17:27 somewhat, somewhat abusive.
0:17:34 This is going to have, unfortunately, it’s really going after what is a key attribute in any brand.
0:17:36 And be clear, the brand is incredibly important.
0:17:37 It’s what precedes you.
0:17:42 It’s what puts you in the room before you’re there in terms of negotiations and expectations.
0:17:46 But one of the key things about our brand that people don’t appreciate until now is the U.S.
0:17:48 is actually fairly, is this fair?
0:17:50 I think it is, is fairly consistent.
0:17:55 There are certain standards around free trade, rule of law, consistency.
0:17:58 Quite frankly, we’re slow to change things.
0:18:03 We have, you know, checks and balances government that any large treaty you, you could believe
0:18:06 that we just weren’t overnight going to do away with NAFTA, that there was, you could
0:18:13 invest around it, Mexico and Canada, because it would probably stay in place for a long time.
0:18:17 And the only way it would be changed is if all three houses of government agreed on it, not
0:18:23 that, you know, someone had given the campaign $285 billion showed up with just a bunch of
0:18:23 kids.
0:18:27 By the way, I went to dinner with one of the, I was at a dinner with one of the doge kids.
0:18:27 Oh, really?
0:18:28 Yeah.
0:18:29 I didn’t speak to him.
0:18:31 He’s, I think, about 19.
0:18:32 And it felt everyone.
0:18:35 Did you like slip him a drink and say, don’t worry?
0:18:40 I’m not going to tell anyone you’re underage and that you’re in my social security payment.
0:18:42 I’m just getting, you’re too young for social security.
0:18:45 Yeah, no, I’m pretty sure I’m going to be getting mail from the AARP.
0:18:47 But yeah, it was, it was sort of interesting.
0:18:51 And I, I, I was initially going to go over and talk to him and I thought that’s just going
0:18:52 to depress me.
0:18:58 Anyways, I’m now going to parties with the doge children, but this is, it’s hard to see how
0:19:01 we don’t come out of this pretty structurally damaged.
0:19:03 It just doesn’t, doesn’t make any sense to me.
0:19:05 All right, let’s take a quick break.
0:19:06 Stay with us.
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0:22:26 Welcome back.
0:22:32 Last week, Texas Representative Al Green was formally censured after interrupting President Trump’s address to Congress, shouting,
0:22:36 No mandate to cut Medicaid, as he waved his cane.
0:22:44 The moment led to his removal from the chamber and a 224-198 vote to rebuke him, with 10 Democrats joining Republicans in the censure.
0:22:49 This split underscores ongoing divisions within the party over how to push back against Trump.
0:22:57 Green, who has a history of direct action, including being arrested alongside the late Representative John Lewis, seems unbothered by the consequences, saying,
0:22:59 You have to be willing to suffer the consequences.
0:23:05 Jess, what do you think this says about the Democratic Party that 10 of their own members voted to censure Green?
0:23:08 Is this about decorum, or is it a sign of deeper fractures?
0:23:15 Well, I think that there is an unfair expectation that Democrats are supposed to have it perfectly together at this moment.
0:23:20 Like, after Romney lost in 2012, they spent years trying to figure out what to do.
0:23:26 And they had a plan, and they ended up with Donald Trump as the nominee in 2016 anyway, and that definitely wasn’t their plan.
0:23:39 So, I’m trying to take a step back and look at this like, everybody is out to win their race, or to at least win their day, in terms of coverage, what they’re putting out there.
0:23:44 And those 10 members who voted to censure Al Green are from swing districts.
0:23:45 They’re representing Trump voters.
0:23:50 It may just be how they feel also personally, but you look at the character of these people.
0:23:56 We had Tom Swasey on the podcast before, like, a Chrissy Houlihan, Jared Moskowitz, Ami Barra.
0:24:02 Like, these are really great, dependable Democrats that believe strongly in the mission of the party.
0:24:03 They’re great representatives.
0:24:06 And I think they’re just running their own races.
0:24:08 That it wasn’t personal about Al Green.
0:24:13 I don’t think it was about, you know, taking a stand as a unified Democratic Party.
0:24:28 I think that they felt like the way that it looked to have Al Green not only doing that and disrupting to that level, and it should be noted that Marjorie Taylor Greene and Lauren Boebert and Joe Wilson from years ago when Obama was president, have been hugely disruptive.
0:24:36 And Republicans didn’t care, and they didn’t censure them, and everyone just kind of moved on because that’s their character and that’s who they are.
0:24:43 But Democrats always hold ourselves to higher standards, and it can be tough electorally, but I do like that about us, that we have some sort of moral compass.
0:24:56 But the big problem with what happened during Trump’s speech is that there were these incredible guests that he brought, including this 13-year-old who has had brain cancer.
0:25:03 I think he’s had 13 operations, and he was essentially like a make-a-wish kid, right, who got to become a Secret Service agent.
0:25:08 And a bunch of Democrats didn’t even bother to look up from their phones while he was being honored.
0:25:29 And I think that that’s really what turned a lot of those Democrats who voted to censure Al Green and even some who didn’t vote to do that, like a Ro Khanna, but spoke out against how awful that looked, that we just didn’t seem up to the challenge in that particular moment.
0:25:41 Like, there is a way to not normalize some of the things that Trump is saying, and there were tons of lies, and his speech was an hour and 44 minutes, so the fact-checkers couldn’t even keep up with what was going on.
0:25:50 But when you have guests like Lake and Riley’s family was there, hostage families, this kid with brain cancer, you got to stand up and you got to applaud.
0:25:52 And they didn’t do that.
0:26:01 Yeah, I thought it was really, really telling in the sense that, one, it was just, I think we came out of that, when I say we Democrats, big losers.
0:26:04 We looked reckless, overly emotional.
0:26:11 I think our behavior just turns off moderates and emboldens Republicans.
0:26:19 Because, look, at the joint address or gatherings of Congress, the president wins.
0:26:33 It’s a bully pulpit, there’s a lot of majesty, and what you do in that situation, quite frankly, is you sit quietly, you say nothing, and in instances where they bring in a hero or a kid who’s endured a lot of surgery, you stand up and you applaud.
0:26:36 You show you’re, you know, you show you’re still a human, right?
0:26:43 Instead, all of the disruption and the woman following around with the sign saying, this is not normal.
0:26:48 I mean, Marjorie Taylor Greene and Lauren Boebert look like idiots, and we didn’t like it when they did it.
0:26:51 And we shouldn’t, we shouldn’t copy that kind of behavior.
0:26:54 It really made us look weak.
0:26:58 I actually thought, you know, the best moment for the Republicans was when they removed him.
0:27:01 I thought Speaker Johnson came across as authoritative.
0:27:07 And we’re starting to look like, I mean, it kind of made me sad just for America.
0:27:12 It feels like we’re two steps away from being, whereas in South Korea, where occasionally the Congress just breaks out into fisticuffs.
0:27:16 It’s like we’re about to become that nation.
0:27:22 And the other thing I think it reflects poorly on Democrats is clearly our leadership has no control over these people.
0:27:25 Because this just didn’t make sense for the Democratic Party.
0:27:27 Your point is an interesting one.
0:27:31 And that is, I’ve never understood why the Democratic Party eats our own.
0:27:38 I’m still pissed off at Senator Gillibrand for getting all high and mighty and chasing Senator Franken out of office.
0:27:38 So I think would have been…
0:27:43 And did you say she didn’t have the same kind of words for Andrew Cuomo getting back in the mayoral race?
0:27:44 She got her seat.
0:27:46 She was essentially an unknown.
0:27:48 And in my view, she kind of brightens up her room by leaving it.
0:27:54 And the Clintons appointed her, right, to the Senate seat that was vacated.
0:27:55 My understanding is by Secretary Clinton.
0:28:01 And the Clintons don’t speak to her anymore because I think that she’s not a very consistent person.
0:28:04 But for her to basically eat one of…
0:28:12 For us to allow her to ruin the career of one of our most articulate and, quite frankly, humorous voices counter to Trump,
0:28:17 so that she could have an 11-second run for presidency, that was the ticket no one was asking for.
0:28:19 Remember that?
0:28:23 The former mayor of New York and Kristen Gillibrand were both running for president.
0:28:27 And my favorite was she said she wanted to represent other young mothers.
0:28:28 I’m like, you’re a young mother?
0:28:30 Anyway, is that rough?
0:28:31 Is that rough?
0:28:31 Not cool.
0:28:33 I’m a 41-year-old woman.
0:28:35 No, but she’s much older than you.
0:28:37 I know, but just don’t do…
0:28:39 Just, you were good before that.
0:28:40 I was good.
0:28:43 Snatching defeat from the jaws of victory.
0:28:45 I am who I am.
0:28:48 But, yeah, I agree with you.
0:28:50 At first I thought, it’s good they censured him.
0:28:55 And then I thought, why are we always deciding to eat our own and hold our…
0:28:58 Like you said, we shoot ourselves in the foot.
0:29:01 And I’m not sure we should be disarming unilaterally.
0:29:04 But I thought it was a terrible look for Democrats.
0:29:08 Yeah, I wanted to add to that with the eating your own.
0:29:12 Al Green, by the way, is in a Democrat plus 53 seat.
0:29:19 He doesn’t have to think about what his constituents are going to say, right, if he causes a ruckus.
0:29:21 I mean, inevitably, I’m sure they like it.
0:29:22 He’s been their representative a long time.
0:29:30 But what really pissed me off was seeing progressives criticizing Alisa Slotkin, who gave the Democratic response.
0:29:34 So Bernie did his own thing, as usual, and he did great.
0:29:36 He had millions of social media impressions.
0:29:40 He is a viral machine in the best possible way.
0:29:43 But Alisa Slotkin gave the Democratic response.
0:29:46 She did an amazing job.
0:29:49 There were conservatives all over social media saying she did a great job.
0:29:56 She talked about being called to service, you know, in New York on 9-11, went and joined the CIA, did three tours.
0:29:59 She just won a swing state that Donald Trump won.
0:30:00 She managed to pull that off.
0:30:05 She talked about growing up in a household with a mom who voted for Democrats, a dad who voted Republican.
0:30:16 She talked about how happy she was that we had Reagan during the Cold War and not Trump because he would have ceded the world to the USSR.
0:30:23 And progressives are dumping on her because she said that George Bush was a patriot and that she said anything nice about Reagan.
0:30:27 And I saw a lot of comments like, oh, well, why isn’t she talking about FDR?
0:30:33 FDR is not a touchpoint for many people who are alive right now.
0:30:36 I understand on a historical basis why that makes sense.
0:30:53 But if you think that talking about Reagan and Bush being of good character isn’t smart if you are trying to get swing voters, moderate voters, left-leaning independents, even some right-leaning independents to vote for you, or even just that she’s telling us how she won her election.
0:31:02 I mean, we should just be having tutorials all the time from Democrats that pulled these miracles off in this environment.
0:31:04 And it really upset me.
0:31:12 I was like, this is—if you think she’s too conservative, you don’t like that she voted for the Lakin-Riley Act, you’re concerned about, you know, how she’s going to be on trans issues, etc.
0:31:13 That’s fine.
0:31:15 There’s a time and place for that.
0:31:28 But when you see someone that gets up after Trump’s speech, which had a very high approval rating in terms of the audience, which was skewed Republican, of course, but still, like, he did well in terms of his delivery.
0:31:29 She gets up there.
0:31:40 She gives a succinct response to it that talks about what really should matter to the party, like the economy, our national security, making sure that the day-to-day lives of Americans is improved and better.
0:31:43 And you want to shit on her?
0:31:46 Like, I have no time for that at all.
0:31:51 Yeah, what the Republicans have that the Democrats lack is a certain level of synchronicity and coordination.
0:32:01 And that is, if you look at the relationship between these kind of conservative think tanks, conservative media, and Republican talking points and discipline, they’re coordinated.
0:32:11 And the sum of its parts, or the whole is greater than the sum of its parts, whereas the Democrats look sclerotic, like, oh, we don’t like the person giving the response because they were too moderate.
0:32:14 Oh, we’re, you know, we’re going to have these random interruptions and yell out.
0:32:16 We just look all over the place and disorganized.
0:32:19 And, like, quite frankly, like, we just don’t have our shit together.
0:32:34 And something that people vote for is they would rather vote for someone who seems resolute and youthful and vigorous and competent than someone who just seems to be kind of, like, flailing and don’t know, you know, you don’t get a sense for where they stand.
0:32:42 And the same reason why I think our, you know, our trading partners are going to not trust the U.S. around different alliances.
0:32:47 I think that the American public right now looks at the Democratic Party and is like, Jesus Christ, pick a theme.
0:32:49 Like, what, who are you guys?
0:32:50 What are you?
0:32:58 And, you know, the response to this has been, you know, ranges from ineffective to kind of overly, overly emotional.
0:33:01 It’s just a, it’s just not a good look for us.
0:33:01 All right.
0:33:03 Let’s take one more quick break.
0:33:03 Stay with us.
0:33:07 Hey there.
0:33:11 I’m Peter Kafka, the host of Channels, the podcast about tech and media and the way they’re colliding.
0:33:17 And this week I’m talking about the state of the movies and the state of TV and how they all get melded together in the Oscars.
0:33:21 A huge event that looks like it’s going to get smaller every year.
0:33:28 Here to explain what happened this year and what’s going to happen in the future is Matt Bellany, the veteran Hollywood journalist from Puck.
0:33:32 Matt is smart and he’s going to make you feel smart for listening in.
0:33:37 You can hear our chat on channels from the Vox Media Podcast Network.
0:33:51 This week on The Vergecast, we are asking existential questions about laptops.
0:33:53 What do we want our laptops to be?
0:33:54 We’ve had them for decades.
0:34:00 And every time somebody has a big, wild new idea about laptops, it tends to go terribly.
0:34:06 So this week we got new MacBook Airs from Apple, which have new chips, but are just the same as they’ve ever been.
0:34:14 And then there are companies like Framework, which want us to rethink the way that we buy and upgrade and repair and use our laptops.
0:34:17 So what do we want from our computers?
0:34:33 This week on Prof G Markets, we speak with Jonathan Cantor, former Assistant Attorney General for the Antitrust Division of the U.S. Department of Justice.
0:34:41 We discuss which sectors he believes most need antitrust enforcement and how businesses actually feel about antitrust.
0:34:43 The dirty little secret is that business actually likes what we do.
0:34:48 They’re the ones encouraging us to bring cases because they want access to markets.
0:34:50 They want supply chains that are affordable.
0:34:54 They want greater supply of key inputs.
0:34:55 Right.
0:34:57 This is something that’s quite popular in business.
0:35:01 You can find that conversation exclusively on the Prof G Markets podcast.
0:35:04 Welcome back.
0:35:15 Before we go, California Governor Gavin Newsom is under fire from LGBTQ plus activists after saying it’s deeply unfair for transgender girls to compete in high school girl sports.
0:35:22 He made the comments on the debut episode of his new podcast while chatting with right wing provocateur Charlie Kirk.
0:35:31 Newsom, once a trailblazer for LGBTQ rights, also agreed that a Trump campaign ad attacking Kamala Harris over gender affirming care was politically devastating.
0:35:39 Speaking of Harris, she’s reportedly considering a run for California governor in 2026, and she’s told allies she’ll decide by the end of the summer.
0:35:45 One could cement her leadership in the Democratic Party, but take her out of the running for president in 2028.
0:35:49 Meanwhile, Democratic strategist James Carville has a message for the party.
0:35:51 Do nothing.
0:35:56 He argues that Republicans are so bad at governing their own chaos will sink them.
0:36:01 Jess, does Newsom’s stance on trans athletes hurt his 2028 chances, especially with progressives?
0:36:03 I mean, they’re not going to like it.
0:36:06 It’s part of him tacking to the center.
0:36:18 And I think a little bit of a fulfillment of him coming out and probably what he naturally thinks versus how he’s been campaigning or governing over the course of his career.
0:36:24 But I saw there was a New York Times-Ipsos poll out on the issue of transgender women in women’s sports.
0:36:30 So it’s an 80-20 issue, like across the general public, against it.
0:36:37 But it’s also 67 to 31 percent of self-identified Democrats do not think that transgender women should be playing in women’s sports.
0:36:41 So this is the common sense position, right?
0:36:48 This is the stuff that we’ve been talking about since the Charlemagne and the God ad came out, but really for several years, right?
0:36:50 Like what Bill Maher has been going on and on and on about.
0:36:55 Just say the normal thing, which this is biologically unfair.
0:36:59 We are not trying to tamp down on someone’s civil rights.
0:37:07 It’s hard to make an argument that it is the civil rights issue of our time that transgender women get to compete on a collegiate level against women.
0:37:14 We’re not talking about having equal access to all the amenities of society being treated equally under the law.
0:37:18 We’re talking about a very specific test case of this.
0:37:23 And Tim Ryan was talking about it a few weeks ago, actually, when he was on Maher.
0:37:31 And Maher was quickfire asking him, you know, is this the hill to die on about several issues and brought up this issue.
0:37:34 And Tim Ryan said, no, it’s not the hill to die on.
0:37:42 There’s a way to say that you want to make sure that rights are protected without saying that Leah Thomas should be swimming against biological women.
0:37:47 I get it. Gavin Newsom wants to run.
0:37:55 He’s doing what he can to make sure that he is more palatable to a larger, more moderate electorate when that time comes around.
0:38:00 But I do think that there’s going to be a lot of mea culpa-ing over the course of the next few years.
0:38:11 People are going to have to talk about why it is that they said that Biden was completely fine and that they didn’t think that there were any legitimate concerns about him serving for the next four years.
0:38:13 And certainly a policy like this is going to be one of them.
0:38:15 They’re going to have to talk about the border as well.
0:38:23 Why did you not say anything for a lot of them for the first three years of the Biden administration when there were hundreds of thousands of people crossing the border on a monthly basis?
0:38:26 Did you see the new CBP numbers?
0:38:31 It’s down to, I think, 8,100 crossings in February.
0:38:36 It was 250,000 peak on a monthly basis under Biden.
0:38:39 And this started under Biden, for sure, coming down.
0:38:42 But it’s quite clear there have been no new laws passed.
0:38:49 The rules on the books, if they are enforced, can do a lot in stemming illegal immigration.
0:39:00 I think in general, people look at the Democratic Party and are drawn to some of the ideals and some of the people and then go, oh, wait, but they’re fucking insane.
0:39:02 And this is one of those issues.
0:39:06 I said this two, two and a half years ago on Pivot and got a lot of pushback.
0:39:17 But when there was a bicycle race or a bike race in North Carolina, not a big race, but a race that was big enough that it had cash prizes.
0:39:22 And a transgender woman came across the finish line five minutes before the rest of the crowd.
0:39:32 And then you saw the footage of basically a six foot four swimmer with a just enormous wingspan shows up and takes the NCAA finals and like shatters every record.
0:39:36 And I think America looks at that and goes, they’ve gone fucking insane.
0:39:45 And they’re defending this because they decided this was some sort of woke to establish a woke bona fides who immediately had to go, OK, I’m going to ignore all common sense.
0:39:51 And it was just it’s done enormous damage that we don’t have basic common sense.
0:40:02 And I think I believe our view on this should be, look, if a local school board, we believe let’s embrace the Republican ideology that on decisions around nuance, individual schools and parents should make up their own mind.
0:40:14 If there’s a school where they say, look, a 14 year old transgender woman would really benefit from participating in junior high school or high school sports, where quite frankly, the stakes aren’t that high.
0:40:19 Then fine, they can decide to let to let her participate.
0:40:29 But anything involving scholarships, money, accolades, admissions to colleges, whatever it might be, or contact sports, quite frankly.
0:40:33 No, and I don’t see the crime against humanity here.
0:40:35 I will never play basketball.
0:40:37 I don’t have those skills.
0:40:38 I wasn’t born with those skills.
0:40:45 And I believe if you’re born with testicles and a penis and the advantage of testosterone and that bone structure, unfortunately, you know,
0:40:51 you don’t get to play women’s sports because it, to me, the math was just so simple.
0:41:08 And that is, if we’re going to permit this and have no regulation around it, then essentially what you’re saying is all the accoutrements of athletics, all the money, the fame, the prestige, the relevance, the self-esteem is going to slowly but surely be sequestered to people born with a penis.
0:41:13 I was just shocked feminists didn’t say, no, we can’t, we can’t have this.
0:41:19 And we just allowed this just strategically on an issue that really doesn’t impact that many people.
0:41:25 And I’m sure we’ll get emails on that, to the, that was where we were going to say, okay, this is a big issue for us.
0:41:27 And we just come across, it’s just insane.
0:41:35 And the one commercial that moved the needle more than anything during the presidential campaign was that commercial basically saying, you know, I think it was accusing the Democrats.
0:41:42 And of course, I believe it was somewhat of an exaggeration or taken out of context that we were paying for the transgender surgery of inmates.
0:41:51 This to me, I think this is Governor Newsom, who we know is running, you know, triangulating to the middle.
0:41:57 And quite frankly, pissing off the left is a feature, not a bug in terms of your electability.
0:42:03 Somebody is going to have to, you know, someone was saying to me, who’s the leading candidate for Democratic nomination in 2028?
0:42:06 And I said, it’s, it’s probably governor you really haven’t heard of right now.
0:42:08 Someone will rise to the moment.
0:42:11 And I’m not even sure we know this person right now.
0:42:17 I’ve always thought Governor Newsom would make a really strong candidate because I’m convinced we’re a very luxurious nation and he just looks presidential.
0:42:19 Also, I think he’s a fantastic debater.
0:42:26 I think he’s one of maybe a handful of Democrats that goes behind enemy lines as evidenced by the fact he went on with very conservative commentator, Charlie Kirk.
0:42:31 But this, this needs to be an issue that the Democrats need to pivot very aggressively.
0:42:39 People, people should have rights if a local school wants to let a transgender girl play sports, more power to you.
0:42:45 But with respect to anything regarding, you know, advantage, no, this just doesn’t make any sense.
0:42:51 They need to pivot hard on this because otherwise they are just handing a gift, the gift that keeps on giving to Republicans.
0:43:00 Yeah, they also need to talk about it in the framework of fairness, because that has been where Bernie Sanders has been so successful, right?
0:43:07 And talking about the oligarchy that’s out there and how unfair things are for the average American, the American worker, et cetera.
0:43:16 And so that’s how Governor Newsom and Charlie Kirk were talking about the issue on his podcast, where he said, you know, I was a college athlete, so was my wife.
0:43:17 I have two daughters.
0:43:19 I know that it is not fair.
0:43:33 And my conservative co-hosts on The Five have obviously been relentlessly talking about this, but they picked up on exactly what you said, which is where are the feminists in all of this?
0:43:42 And you’ve seen very few, you know, champion female athletes, including for Martina Navratilova, who is incredible on this issue, speaking out about it.
0:43:45 You can’t get an answer from like a Billie Jean King, for instance, on this issue.
0:43:56 You have a Megan Rapinoe, Sue Bird, et cetera, defending trans women’s rights to be in seriously competitive women’s sports.
0:44:05 And I think a lot of that comes down to the fact that people are just denying what biological advantages are afforded to men.
0:44:12 And that has been something that we just haven’t been able to have, you know, serious, clear-headed conversations about.
0:44:16 And some of that gets into the language police stuff that we have, you know, weird terms for things.
0:44:20 And we’re talking about inseminated people and struggling to find men and women.
0:44:29 Not that we don’t know that there are, you know, 30 intersex combinations that can happen and that the law needs to make sure that it protects as many people as possible.
0:44:43 But when you can’t have a straight, normal, common-sense conversation with someone where you can talk about men and women and talk about where it is appropriate to have transgender athletes competing and where it is inappropriate to do so,
0:44:49 we become like aliens to regular people.
0:44:58 Even seeing that 30 percent of Democrats versus 18 percent of the general electorate are in favor of transgender women and women’s sports, that’s a pretty big difference.
0:45:02 Obviously, you know, you have a bunch of Republicans in the general sample.
0:45:04 They’re going to be pulling it to the other side.
0:45:08 But when you have a conversation with somebody, if you just went out to lunch with them and said, what do you think about this?
0:45:13 I think odds are that they would think the same way that we do about it.
0:45:18 And there’s definitely, I felt that a couple of years ago when we were speaking about this issue, there’s definitely a narrative you’re supposed to sign up to.
0:45:21 It’s almost like the narrative around being a MAGA.
0:45:26 You have to be MAGA or you could be alienated or voted off the island or Trump will go after you in primary you.
0:45:34 On the left, it’s more nuanced in the sense that if you don’t sign up to the narrative in this kind of certain ideology, you’re treated like an apostate.
0:45:39 And the blowback on this, if you didn’t sign up for the narrative, and there was just no critical thinking.
0:45:42 This kind of seemed like an easy one.
0:45:44 But I think we lost a lot of credibility.
0:45:48 Anyways, what do you think of the idea of a Governor Harris, Jess?
0:45:49 I don’t think we’re going to have a President Harris.
0:45:56 So I think that it is a much more reasonable idea for her to run for governor if she wants to continue to serve the country.
0:46:02 I know that she’s technically the frontrunner in the early polls for 2028, which is what happens.
0:46:05 The last nominee is always the person that’s furthest ahead.
0:46:14 And she did save us from certain electoral disaster because I think if Biden had stayed on top of the ticket, Trump would have won over 400 electoral votes.
0:46:20 And those swing state senators like the Alyssa Slotkins of the world would not have been able to win their competitive races.
0:46:33 But, you know, I assume that people would line up for her in California and that there are a lot of people who are considering running who would kind of bow down to the idea of Kamala getting in.
0:46:36 And perhaps that’s the right route for her.
0:46:42 But I just I feel strongly that the national stage is not going to be where she ends up again.
0:46:45 I’m really split on this because she’s a competent person.
0:46:49 Right. And I think she was a good attorney general, good good senator.
0:46:53 And she’d probably be, I’d like to think, a competent governor.
0:47:00 The problem is, I think when you run for president and you lose against Donald Trump, quite frankly, just I think you go away for a while.
0:47:08 I don’t think I think she’ll be a talking point for for Republicans and their races if she maintains her national profile.
0:47:17 I think when you lose her president, quite frankly, I think the best thing for the party would be if she just went dark until we have a Democratic president and she’s appointed to the Supreme Court.
0:47:18 I think she’d be an outstanding justice.
0:47:20 Yeah, I think she’d be an outstanding justice.
0:47:22 Yeah, I hadn’t thought about that, actually.
0:47:28 I mean, I know people say things like Obama, but I hadn’t thought about it for Kamala.
0:47:31 Anyways, but my sense is she’s going to be a continued talking point.
0:47:36 I don’t think I think she’ll continue to be a flashpoint for for Republicans.
0:47:37 And I wouldn’t be surprised.
0:47:53 I mean, I’ll be curious, but given I think she’s setting herself up for real challenge and embarrassment here, because about every couple of decades, a quote unquote lifestyle mayor governor wins in California cities and in the state.
0:48:08 Because the quality of life in some of our bigger cities in California is is eroded so much that I think the moons are lining up for what I call like a no nonsense kind of Pete Wilson ish kind of kind of governor.
0:48:12 And I would just say I would hate to see her run and lose.
0:48:21 I think it would it would basically send a signal to the entire nation that Democratic ideals are kind of just just totally done and gone.
0:48:26 So torn on this because I think she’s a competent person and would probably be a decent governor.
0:48:42 But I think she her brand and the possibility of a loss and her as a constant talking point for Republicans reminding them of why, you know, Americans didn’t vote for her in the first place will be a real another cudgel or a weapon that will benefit benefit Republicans.
0:48:47 Well, she has a lot of those loony positions that we’re talking about with Newsom that she’s taken.
0:49:03 We only ended up with the Charlemagne the God ad because Kamala signed yes on like an ACLU questionnaire when she was running for president in 2020, saying that she would be supportive of transgender operations for people who are currently incarcerated.
0:49:12 And the New York Times has an analysis, by the way, there are plenty of transgender people who got their gender affirming care while Trump was president.
0:49:16 So he was lying about that and saying that this was just something that happened under the Biden administration.
0:49:22 But this comes that whole conversation was rooted in the fact that Kamala had taken a far left position.
0:49:42 One of the most important propositions or ballot proposition ballot measures was Prop 36 for California this year, which was undoing a 2014, what was it, Prop 47 from 2014, which allowed people to shoplift up to $950 without being arrested.
0:49:43 That’s right.
0:49:47 Right. And it passed with 70 percent of the vote, 68, 70 percent of the vote.
0:49:49 And Newsom opposed it.
0:49:50 And Kamala wavered on it.
0:49:55 She was asked the weekend before the election on like Saturday or Sunday before we all went to vote on Tuesday.
0:49:57 And she demurred.
0:49:59 She didn’t say where she would stand on it.
0:50:02 You can’t be like that anymore.
0:50:04 You can’t certainly can’t run for governor of a state.
0:50:17 We have 70 percent approval rating for something and not take a stance at all, let alone pick the thing that the majority of people are in favor of and not have a good defense for why.
0:50:25 That is. And Governor Newsom had a whole thing about, you know, the issue with privatizing prisons and that it was going to cut out money for drug rehabilitation programs, et cetera.
0:50:34 But as an elected official or someone who wants to be an elected official, being on the wrong side of a 70 30 issue does not bode well for you.
0:50:44 Yeah. So speaking, speaking of being on the or kind of political strategy, what do you think of Carville’s notion that Democrats should step back and let Republicans implode?
0:50:47 Do you think this is a dangerous gamble, this notion of just do nothing?
0:50:55 I think it’s a little more nuanced than do nothing because it’s important that you continue to amplify what is going on.
0:51:05 So the the best message tested line of argumentation right now is around the cuts to Medicaid and that Trump isn’t focusing on the economy.
0:51:09 So over 80 percent want him to focus on the economy. Only 36 percent think that he actually is.
0:51:13 Nobody Republican, Democrat, independent wants these Medicaid cuts.
0:51:17 And I’m sure you’ve seen the coverage of the town halls that are occurring all over the country.
0:51:19 And the Republicans, you know, are saying that they’re astroturfs.
0:51:23 It’s all Democratic plans. And George Soros is setting everyone up for it.
0:51:30 But the Republicans now don’t want swing district congresspeople to have these town halls because it’s gotten so brutal.
0:51:35 And they have veterans showing up who are saying, like, you’re slashing our benefits.
0:51:38 You’re firing me. You know, we don’t like what Doge is doing.
0:51:40 Hands off our Medicaid, et cetera.
0:51:53 And so I think, quote unquote, do nothing if that means amplifying what their spending bill is actually going to do, amplifying what Elon Musk is doing, which he’s the weakest link in the administration.
0:51:56 People like the idea of getting rid of waste, fraud and abuse.
0:52:03 They don’t like the approach that he’s taking to it and don’t really see that as what’s being executed.
0:52:08 Then I say Carville’s right. But he’s also taken a lot of big swings and missed.
0:52:14 Like he said Kamala was definitely winning. You know, he’s a it’s part of his charm for sure.
0:52:20 Right. Yeah. He’s well, whenever he speaks, you listen, because he’s just so compelling and so matter of fact.
0:52:22 But he’s a winner and we like winners.
0:52:24 That’s right. But you’re I think your instincts are right on.
0:52:34 And that is it’s not do nothing as much as it is demonstrate more discipline instead of running over here and going, oh, my God, the Gulf of Gulf of America.
0:52:36 Or male versus female. No, no, no, no. Be more disciplined.
0:52:45 Talk about surrender in Ukraine and that they’re coming after your Medicare and have experts and data and look like an adult and just hammer them.
0:52:50 The difficult thing about Democrats is not what to talk about. It’s what not to talk about.
0:52:58 And specifically, they need to stop taking the debate around these ridiculous, stupid issues that don’t affect anybody that are clearly being thrown out there as weapons of mass distraction.
0:53:02 Even Doge, I believe, is a weapon of mass distraction.
0:53:06 And instead of getting all angry about 19 year olds, whether they should be in there, I get it.
0:53:13 But the majority or a lot of moderates, quite frankly, see some of these firings and under the breath are like, well, welcome to the work week.
0:53:21 This has happened to me and other people. What they should, in my opinion, be focused on is a much more boring but impactful piece of data.
0:53:28 And that is this is all a distraction to the notion that, one, they’re going to increase the deficits by $800 billion a year, which is nothing but a tax increase.
0:53:34 We’re about to experience the greatest tax increase in history on young people in the form of unprecedented deficits.
0:53:40 And two, they’re coming for your Medicaid. There’s no way. Look at what they’re planning here.
0:53:43 They’ve tasked the Energy and Commerce Department with cutting $800 billion.
0:53:46 That means they’re coming. They’re coming for Medicaid.
0:53:50 And just, and anything else, again, it goes back to the same notion.
0:54:01 The Democratic leadership doesn’t have the discipline that McConnell imposed or that, you know, it appears that Speaker Johnson and Trump are imposing on the Republican Party.
0:54:04 We just lack, they just lack sort of that.
0:54:10 And instead, they just, they take the bait and they start saying, can you believe he said this?
0:54:13 And it’s like, well, okay, that, that, yeah. All right.
0:54:24 We all know he’s reckless and he’s weird, but focus on the things that are indefensible on Republicans’ part that are popular among Americans and hammer away on those one or two issues.
0:54:28 So it’s, again, it’s not doing nothing. It’s more discipline.
0:54:37 Just, just before we wrap up here, what do you think of what happened recently that supposedly Trump has directed, has basically said, all right,
0:54:45 Doge is now an advisory or almost like a service to different cabinet members, but they ultimately get to make the decision around layoffs.
0:54:45 Any thoughts?
0:54:48 Seems like Elon Musk is ruffling some feathers.
0:55:04 There was some reporting of what went on in that cabinet meeting and that Secretary Duffy, who oversees transportation, and Secretary Rubio, our Secretary of State, were both forthcoming in their criticisms of Musk and basically said, like, what the fuck do you want us to do?
0:55:13 Like, Sean Duffy said, we’re having plane crashes, right, at an unprecedented level, and you’re cutting air traffic controllers.
0:55:18 And that apparently Trump sided with them over Musk.
0:55:22 So I don’t know, you know, I’m not a Musk whisperer.
0:55:26 I have not deeply studied him as much as you or certainly as Kara has.
0:55:47 But it feels like he is on more tenuous ground than he certainly was at the beginning of this and that Trump at least has some level of realization that the fate of the administration’s success actually depends on these individual bureaucracies working well and not necessarily whatever Elon Musk is doing.
0:55:54 So he’s continually demoted, you know, they say Amy Gleason is actually the administrator, and now he is an advisory person, et cetera.
0:55:58 And you look at Tesla basically cratering, right?
0:56:00 The international sales are some of the most astounding.
0:56:02 What is it, down in Germany, like 75 percent?
0:56:07 So he, you know, might want to tend to his home.
0:56:24 That could be his children or his companies that he had before he did this and pay attention to that versus the day-to-day grind where it seems like these folks who got confirmation for these jobs have a different kind of plan on how to execute.
0:56:35 Yeah, if this in fact is true, that he’s now got to defer and the ultimate decision is made or not made by the cabinet heads, it’s effectively, I think, the end operationally of Doge.
0:56:53 And the notion that we decided that an individual, the world’s wealthiest man, who is severely addicted to ketamine, reported by the Wall Street Journal, is concurrently being sued by two women for sole custody of their children because he doesn’t, he’s not involved in their lives.
0:57:02 Maybe that’s not the individual who gets to bypass any sort of congressional vetting or approval to decide if veterans or children get their medical care and food.
0:57:18 And in addition, if you look at what so far has happened from Doge, the audit, the only thing it has demonstrated, in my view, is that the U.S. government has a lot less fraud and waste than initially feared.
0:57:32 If this were a physical, I would argue that the U.S. government has gotten a clean bill of health, that this wall of receipts meant to just highlight all the outrageous waste and fraud, there’s no there there.
0:57:36 The first thing they reported on the wall of receipts was an $8 billion savings.
0:57:38 It ended up it was $8 million and it was money that had already been spent.
0:57:42 And then items two, three, and four, it ended up, weren’t even true.
0:57:47 They are having trouble finding all of this waste and fraud that was supposedly out there.
0:57:49 And this isn’t an operation.
0:57:51 This isn’t about operational efficiency.
0:57:53 It’s about political ideology.
0:58:01 I got an email from a fraternity brother who I hadn’t talked to in 30 years, a kid named Greg Townsend, kid.
0:58:02 He’s now, you know, 57.
0:58:05 And after graduating, you have trouble.
0:58:09 All you see when you hear from these kids is a guy you used to do beer bongs with.
0:58:13 And that’s, you assume they’re still doing beer bongs and listening to Led Zeppelin.
0:58:25 And this, this, this guy, this man, Greg, had gone on to law school and has been working for a division of the UN pursuing war criminals around the world out of, out of Switzerland.
0:58:28 I mean, I was just so blown away by his work.
0:58:40 And he said that their funding had just been shut down, but they’re continuing to work because they all, all are so committed to creating an incentive system globally where people think twice before committing war crimes.
0:58:43 And essentially the funding was cut off.
0:58:49 So if you look at where they quote unquote have what Doge has really done, it’s not an operational or an efficiency mechanism.
0:58:53 It’s a political ideology because they just decided, I know, let’s just shut down all U.S. foreign aid.
0:58:58 That’s a political decision that has nothing to do with efficiency or fraud.
0:59:05 And what Trump has been really good at is using people as human shields and kind of soaking them up, having them do his dirty work and then firing them.
0:59:12 92% of his advisors were fired in the first administration, which was more than the previous three administrations combined.
0:59:18 And I think he’s essentially, I mean, the thing about Trump that’s just so obvious that people don’t want to talk about nobody.
0:59:21 He is literally Chernobyl after the meltdown.
0:59:25 You get near him, you’re going to die a hideous death, at least your reputation.
0:59:27 And it’s happening to Musk.
0:59:29 I see it here at South by Southwest.
0:59:31 People are throwing shit at Teslas.
0:59:36 You know, my, when I talked about Tesla, I’m like, you know, zero to 1939 in three seconds.
0:59:44 It’s really hard to understand the political calculus or the political calculus here, the economic calculus.
0:59:46 He really fucked up.
0:59:55 And that is the opportunity to remove inspectors from the 32 different investigations across 11 agencies against his companies.
0:59:55 Okay.
0:59:59 That’s an economic incentive to get involved and be cozy up to the president.
1:00:03 But the cost that’s being levied on him and his brands right now is enormous.
1:00:05 People are canceling Starlink contracts.
1:00:10 Entire countries are saying, Poland’s saying, we can’t count on you or your technology.
1:00:13 Provinces of Canada are canceling Starlink.
1:00:16 And I thought that’s the one that is really going to scare the shit out of them.
1:00:22 What’s unusual about this, and I use Nike as a counterexample, Nike took a political stand.
1:00:24 And sometimes it works.
1:00:29 When they decided to embrace Colin Kaepernick when he bent a knee, that was a real political risk.
1:00:30 But they did the math.
1:00:34 And that is two-thirds of Nike sales are outside of the U.S.
1:00:39 No international individual is that concerned or thinks the U.S. has race relations correct.
1:00:51 And about two-thirds of their revenue came from people under the age of 30 or non-whites, meaning the people that were outraged and did videos of burning their Nikes, that was probably their first pair on Nikes.
1:00:58 They did the math and said, this is going to cement and tickle the censors of the majority of our profits and revenue base.
1:01:01 And Musk has done the exact opposite.
1:01:07 75% of Republicans who he’s sort of lighting up or illuminating or activating say they would never buy an EV.
1:01:17 So he’s done the exact wrong math here, and that is the group that he is most going to piss off and alienate is sort of his core customer base.
1:01:25 And all this bullshit in Europe, it does seem like there’s a very healthy gag reflex in Europe around him trying to meddle in their election.
1:01:30 But I have never – it feels to me, and I’ve said this before and I’ve been wrong, this feels like a tipping point.
1:01:36 It feels like the worm has turned, and I was thinking the Bill Burr rant against him was sort of evidence of that.
1:01:44 But Tesla has shed a third of its value in February, and I mean the polling on this guy is absolutely – it’s just brutal.
1:01:56 Anyways, I don’t – I think – and I’m calling it, and I’ve been wrong before, but I think the Musk brand has absolutely peaked and is crashing in the fall right now feels unsustainable.
1:01:58 I mean, I mean, you would know better than me.
1:02:07 I feel like it is very early in the Trump administration to be writing the obituaries for anyone, let alone the person who got Trump elected.
1:02:18 And we also need to keep in mind that the normal things that should, quote-unquote, take a person down do not apply, certainly to Trump, right?
1:02:28 And a lot of people in his orbit, and I get this criticism all the time from lefty friends, you know, don’t normalize him, you know, this is normalizing, et cetera.
1:02:40 There is nothing more normalized than the fact that Donald Trump got reelected and that everyone knew exactly who he was and that they knew as well that Elon Musk was coming in for the ride and all of this.
1:02:44 He was by his side, almost glued to him for the last two months of campaigning.
1:02:55 So I’m not sure that I agree completely with you in terms of this being the end of it, but it certainly feels like a trouble-in-paradise moment.
1:03:01 And that, again, the American people are smarter than Trump and co. think that they are.
1:03:11 And they’re trying to convince all of us that public servants are just leeches instead of people who dedicate their lives to helping other people.
1:03:13 And does that mean there aren’t some bad public servants?
1:03:15 Of course there are.
1:03:28 But by and large, a workforce that’s 30% veterans, people that we all agree with, should have the most opportunities when they come home from serving this country, possibly, you know, risking their lives for us.
1:03:34 And they should have these possibilities to go and work for us and continue to make America better.
1:03:39 That Musk is really off-key in terms of how he’s talking about those folks.
1:03:51 Yeah, to your point, Kara was saying that Trump is scared of Musk, that he’s the world’s wealthiest man, which is his metric for credibility, and that the last thing he wants to do is piss him off.
1:03:52 I think he’s just going to fade away.
1:03:54 I think it’s going to be, if in fact—
1:03:55 He’s going to disappear him?
1:03:58 Well, no, I think Musk will decide to fade away.
1:04:01 I think Musk at some point is going to do the math and go, this is just not worth it for me.
1:04:14 And also, if in fact it’s now the cabinet members who get to decide or either do this or not do this, Secretary Rubio is not going to lay off some people in the State Department to save some money at this point.
1:04:16 He doesn’t give a shit about a small increase in the deficit.
1:04:18 He’s got a difficult job.
1:04:22 He’s not going to start laying off what he thinks might be bureaucratic.
1:04:26 He wants all the firepower he can get.
1:04:34 The notion that these guys are going to say, okay, I’m really going to take a chainsaw to my—the incentives are I need to get shit done.
1:04:35 I need to reflect confidence.
1:04:37 I need to have decent morale.
1:04:39 I need resources to get things done.
1:04:45 I’m getting shoved back and forth by these decisions.
1:04:45 They need people.
1:05:03 The notion that they are going to decide to start cutting costs, I think effectively or operationally, it might be if in fact he’s now there on top, so to speak, might be, if you will, the end of Doge.
1:05:04 It’s got to be the Pentagon anyway.
1:05:05 Got to be the Pentagon.
1:05:07 I mean, that’s where all the money is.
1:05:12 So they have to go after the Pentagon if they’re going to be actually making any savings.
1:05:17 And we’ve got to go, but I’m just saying it’s all smoke and mirrors, saying we’re going to go, we’re going to cut here or there.
1:05:18 We know where the money is.
1:05:20 It’s in the entitlement programs and in the Pentagon.
1:05:22 And so far, they’re not doing that.
1:05:23 It’s interesting.
1:05:26 That was one, I think, strategic error on the part of the Republicans.
1:05:28 I think they would have had a lot more credibility.
1:05:35 They would have obviated or kind of defenestrated any criticism if they had gone after the Pentagon first.
1:05:41 And that is, I would think it would have been much harder for Democrats to be critical of the process.
1:05:44 I thought that was a strategic error on their part of what started with the Pentagon.
1:05:45 Any thoughts?
1:05:45 Yeah.
1:05:47 I mean, you go where the money is, right?
1:05:51 And that was something that Secretary Hegseth said that he was open to.
1:05:53 He said, you know, we’ve never passed a clean audit.
1:05:55 And we absolutely should.
1:05:57 So, yeah, start with the audit of the Pentagon.
1:05:59 All right, Jess, that’s it for this episode.
1:06:01 Thank you for listening to Raging Moderates.
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1:06:06 Our technical director is Drew Burroughs.
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0:02:18 Today’s number, a hundred and forty five million dollars. The co-founder of Fintech startup Aspiration was arrested last week for allegedly conspiring to defraud its investors of a hundred and forty five million by the way we call bullshit on this company four years ago. Speaking of climate change, Ed, what do climate change deniers and pedophiles have in common? They’re both fucking the next generation.
0:02:38 Ah, that’s good. Yeah, the pedophile stuff never gets old. What’s going on with you? What are you what are you up to? [SPEAKER_TURN]
0:03:04 doing very well. I’m in New York. I’m excited for South by Southwest. We’re gonna be heading over this weekend. Of course this episode will be out by the time we’re there. But I think it’s gonna be great. You know what I’m really excited for though, is the flight back flying with you. Not enough seeds. There’s only seven seeds on the plane. How many seeds are on the plane? [SPEAKER_TURN]
0:03:13 I haven’t counted. Um I can’t go here. There’s no way I don’t come across as the world’s biggest douchebag talking about the number of seeds. [SPEAKER_TURN]
0:03:43 You’re right. I’m I’m setting you up for failure. How about let’s set you up for success here and just talk about this aspiration situation, because you wrote about this four years ago. This is by the way one of my first jobs at Prof G_ Media was you were talking about this company aspiration and it was my job to go in and do the research because you had this feeling that this company which was selling credit cards but also positioned itself as helping with climate change, you said this is definitely a bullshit company,
0:03:52 you had the team look into it, I looked into it and we determined, yes, this company is fake. We have a clip from what you said about this company on the Prof G_ POD.
0:04:21 One example one example of reaching too far into the barrel aspiration, a finance firm that claims its products can open quote change, climate change, end quote. In August the company announced it was going public, via spec, at a two point three billion dollar valuation. Change, climate change. Mm that would be awesome. Except there’s a catch. This is a fucking debit card. He’s so good. [SPEAKER_TURN]
0:04:30 Banger. And now the guy’s uh been arrested for fraud. By the way, it never went public because I think investors eventually caught on to this. But he’s now been arrested. You called it. [SPEAKER_TURN]
0:05:00 it was such an attempt to drape yourself in social justice while offering something uh f m pretty borderline fraudulent. They were they were saying that we take a portion of your credit card feeds and invest in uh sustainable companies. And if you read their, you know, their website and I got s we got some financial information we, dug in, this was a shitty little credit card company charging onerous fees claiming to do something they weren’t doing and saying oh, but
0:05:29 were a new economy company and they had famous investors, they had actors. A friend of mine that ends up was an investor and called me and sort of I don’t wanna say put pressure on me but said do you wanna speak to management there that’s I think you got this wrong. I’m like I said to him I said we’ll just call him Bob. I’m like Bob this is a fucking fraud, this is we work with a climate change veneer smeared over it. I thought that was gonna get more attention than the we work post because I thought it was even more obvious of fraud. [SPEAKER_TURN]
0:05:59 few people actually knew what aspiration was, which I think is why it was so prescient of you to to point it out. I just wanna point out what some of the red flags we found with this company were. So the first the first red flag was that they were trying to SPAC. And there were just a bunch of kind of bullshit companies that were SPACing. They did have a giant celebrity investor list. One of those investors was Leo DiCaprio. That was kind of a red flag. And then as we looked into it, w it s started to get worse and worse. So they had this E_S_G_ fund that they
0:06:20 the Redwood fund, and they charged these exorbitant fees on it. But when we looked at the actual portfolio, what we found is that it was just a regular portfolio, and they even had positions in Southwest Airlines, which of course b burns through fuel, and also a fracking company, which was hilarious. Their worst crime though, was this thing called EBITDAM. [SPEAKER_TURN]
0:06:23 God. Like community-based EBITDA, we work. [SPEAKER_TURN]
0:06:53 Exactly. This was earnings before interest taxes depreciation, amortization and marketing. And according to this company they were EBIT damn profitable. But then you look at the fine print and you realise they were spending a hundred and fifty percent of their revenue on marketing. So they’re trying to position themselves as a profitable company, but they’re saying oh this marketing thing we’re spending basically all of our money on marketing but don’t worry about that we’re profitable. And that was sort of our that was I would say our biggest red flag. This company uh is
0:06:57 their their investors. And so it never stopped and now the guy’s going to jail. [SPEAKER_TURN]
0:07:23 I loved Adam Newman’s initial redefinition of EBITDA and it was like earnings before everything else, earnings before Dolly Parton, earnings before March Madness. It was just it was like let’s pretend that profits are top-line revenues before expenses. Let’s just get rid of this pesky thing called expenses so we can say pretend that we’re profitable. But yeah, uh I’m I’m I appreciate the recognition. [SPEAKER_TURN]
0:07:27 And uh uh drinks on me this week in Austin. [SPEAKER_TURN]
0:07:31 I can’t wait. Let’s get into our weekly review of Market Visals.
0:08:08 The S_ and P_ five hundred declined, the dollar slid, Bitcoin was volatile and the yield on ten year treasuries climbed. Shifting to the headlines. Disney is laying off nearly two hundred employees or six percent of its workforce in its A_B_C_ news group and Disney entertainment networks divisions. As part of the cuts the company is also shutting down political and data journalism site five thirty eight, which it acquired in twenty thirteen. Walgreens is officially going private after closing a ten billion dollar deal with Sycamore Partners, the private equity
0:08:34 firm is expected to keep Walgreens core U_S_ retail business, while potentially selling off or spinning out other parts of the company And. finally, Ontario cancelled a Starlink contract worth one hundred million Canadian dollars after U_S_ tariffs on Canadian imports took effect. Scott, uh let’s get your thoughts starting with Disney deciding to lay off two hundred employees, nearly six percent of the workforce at A_B_C_ and their entertainment networks. [SPEAKER_TURN]
0:09:04 Uh it just makes sense. This is part of capitalism, and that is um they need they need to consolidate, bulk up, uh and then cut costs. These companies should have one back-end as far as news, and if they have different front-facing uh brands that appeal to different audiences, that’s fine, but last year Disney’s linear networks’ revenue declined nine percent and operating income was down sixteen percent. They’re not alone here. U_S_ linear T_V_ advertising uh will decrease an estimated four percent annually,
0:09:34 twenty thirty, which doesn’t seem like a lot, but when it’s going for another five years, four per cent, it means it’s gonna be it’s gonna lose a quarter of its revenue uh or a fifth, and that means you know, that’s just real pain ’cause some of those costs are fixed, so you’re talking probably they’re probably gonna shed another twenty or thirty per cent of the workforce over the next five years. I just had lunch with a fairly famous uh news anchor who is fantastic at what she does and uh ju she’s one of the lucky ones, she’s still making a
0:10:04 a lot of money, but I think she her salary got cut by thirty percent and you’re seeing you’re seeing cuts across the most famous anchors of like twenty to eighty percent, Joy Reed, Chuck Todd, Jim Acosta, and Lester Holt. All fantastic what they’d do or did, all too expensive. And George Stephanopoulos uh his contract’s been renewed, though he had to take a pay cut from his previous twenty million dollar deal. He’s lucky he got his deal a few months ago. I think it’d even be less now.
0:10:34 Rachel Maddow renegotiated. She is the friends or the the anchor of M_S_M_B_C_ She. had to reduce her pay from thirty to twenty five million yeah, crimey or whatever that’s, not too much Anyway. so I it it look the market is knowing what it’s supposed to do. It’s reshaping the winners and the losers. Uh you’re gonna see I think private equity come in here. You’re gonna see a lot of consolidation. I think Disney is a survivor ’cause of this unique singular positioning around family and just the incredible I_P_ they have. I w also wonder if this is an interesting
0:10:36 private opportunity. But anyways, what are your thoughts? [SPEAKER_TURN]
0:11:07 Yeah, I find this interesting ’cause I I visited a the A_B_C_ studio last week, one of the producers on on A_B_C_ news took me around, and it was really cool and I was just kind of struck by how impressive this operation was. Like the office looks like a cross between like NASA airspace control and also like the trading floor of Goldman Sachs and it’s filled with people like gaffers and technicians and co-ordinati I was asking him like what do all of these people do We? think oh this guy’s on this team, this guy’s on
0:11:37 this team. I mean it’s l it’s thousands of people literally, it’s actually thirty three hundred people. But in the back of my mind the whole time as I’m walking around I’m like this is amazing, but there is no way this makes any sense economically. The fact that you have, as you said, revenues down nine percent, operating income down sixteen percent, six million people cancelling their cable subscriptions in twenty twenty four, and yet the operation looks like it’s the headquarters of the C_I_A_ So. I was sort of walking around I’m like okay, something has to
0:11:52 give here. And that’s what we’re seeing. In this case the thing that’s given is the workforce. And as you say, this isn’t the first time we’ve seen this headline and, yeah, I don’t think it’s the last time we’ll see this headline. I think we’re gonna see many many more headlines like this. [SPEAKER_TURN]
0:12:22 Well if you look at uh means of production, um and I did some analysis here, we’re making three to four times the revenue per employee and granted we’re small, but the means of production are so much less expensive uh in podcasting now granted there’s very you know there aren’t that many winners, but if you can figure out uh kind of a new media platform and keep it kinda lean and mean, you can just see what’s what’s happening here. It’s just incredibly uh challenging for
0:12:52 folks I, describe I was jokingly described in The Anchors as uh pilots for Pan Am in the seventies, in that it’s high prestige, they’re begging stewardesses, everyone’s impressed by ’em, but I’m like your days are numbered pretty soon you’re gonna be, you know, on an ember from Lubbock, Texas to Amarillo making thirty eight thousand bucks a year. I personally the way I register it is ten years ago when I was asked to come on CNN I, just was so excited I, remember the first time Anderson had me on his show and I was so I thought wow, I’ve made it.
0:13:05 And now, unless it’s a someone I’d l I’d I’m personal friends with or I I don’t go on because it’s like the juice isn’t worth the squeeze to come across as intelligent and the work and the prep you need to do, not that many people are watching it. [SPEAKER_TURN]
0:13:20 By the way I, just got asked for the first time to go on CNN and then they cancelled on me in the last minute. Most hilarious part is that I was I was uh in for the five A_M_ slot. They’ve they pushed me to next week, so I’ll do it again, but I think the juice is worth the squeeze for me, I’ll say that. [SPEAKER_TURN]
0:13:34 A hundred percent, and plus you you I mean you’re literally you’re gonna be exposed to dozens and dozens of new fans um, five A_M_ on CNN, that is literally like a ninety year old that can’t sleep. I think that’s great, congratulations, I didn’t know about that. [SPEAKER_TURN]
0:14:10 You’ll see this, there’s still a prestige value and that is when people see you on I used to go on Fox every week uh and when people see you on T_V_ for some reason there’s just this veneer of prestige, romanticism or credibility that you don’t get anywhere unless of course you have a guest role on The White Lotus but uh let’s bring this back to me let’s bring this back to me. Anyways, li linear T_V_ it’s not doing well. [SPEAKER_TURN]
0:14:38 It’s not doing very well. Agree. Let’s talk about Walgreens uh which is going private, being bought out by this private equity firm, Second World Partners. This is kind of a big moment for this very iconic American company. This company’s been around for a hundred twenty years. It’s been a public stock for almost a hundred years. It’s been public since nineteen twenty seven. And now you have this icon of [SPEAKER_TURN]
0:14:55 American consumerism. And it’s being bought out by a P_E_ firm for a tenth of what it used to be. Ten years ago this company was worth a hundred billion dollars. The price tag today is ten billion dollars. Your reactions to this news, Scott? [SPEAKER_TURN]
0:15:14 I I think they’re just overstored. I think it’s they’re doing the right thing. Again, capitalism in the market’s a word. I can’t believe this thing was ever worth a hundred million dollars. What I’d be curious and I don’t know if you have any information on this is that my go-to as well, this is Amazon, uh another victim of Amazon. But I don’t really know. Did you uh do you have any thoughts on what’s actually going on here? [SPEAKER_TURN]
0:15:44 I think it’s a whole confluence of things, and the way I would summarise it is just bad management. I think th probably their one of their worst mistakes is just their inability to modernise their pharmacy business, which they really depend on. I mean the those Walgreens pharmacies were incredibly traditional when you compare it to the pharmacies at somewhere like C_V_S_, and I think they woke up one day and telehealth had taken off, and reimbursement rates had come way down, and they just got crushed, especially against C_V_S_, which was a
0:16:14 establishing itself in in the pharmacy benefit manager business too. They also bought Village M_D_ which was a disaster. They were just too late to the party. They they bought that company after COVID. It didn’t work. They ended up taking a six billion dollar impairment charge. And then I think the final thing were these lawsuits. They just got a ton of lawsuits and most of them they settled on and just this year, couple months ago, they got sued by the D_O_J_ for essentially selling
0:16:44 So I think just it’s kinda simple, from a management perspective, it’s been a disaster. I think the question is what does Sycamore do with this company? Where do they go from here? It’s expected they’re gonna split it up into three units where, you have Walgreens pharmacy, they also own Boots in the U_K_ which, I’m sure you’re very familiar with now, which is their U_K_ pharmacy, and their healthcare unit which, is called Shields Health. And Sycamore did a s a similar thing to Staples, which
0:17:10 bought back in twenty seventeen. One interesting stat from the team that I’d like to get your reaction to. One in five private equity owned companies go bankrupt within ten years of acquisition and that is ten times higher than the rate of publicly owned companies. So I I guess the question I would pose to you is w what does Sycamore do with this company and could they just bankrupt the company possibly based on that stat? [SPEAKER_TURN]
0:17:40 I mean clearly they’re gonna cut costs. They’re probably gonna change management and severely reduce costs. And the issue the hard part about retail is that you have to enter into these very risky uh business contracts called a lease. And everybody wants the same real estate. And the owners of this real estate are smart at maximising their revenue by by uh signing up for a ten year lease. So when you pick I mean you have to be very thoughtful. So in in the kinda the history of retail is
0:18:10 registration hardware goes public and they think we gotta grow, so they sign a bunch of bad leases, they’re really promiscuous, and then similar to Walgreens, three and four Walgreens are not profitable and it’s a ten year weeping sore. Unless you declare bankruptcy, you can’t get out of that lease, so you’re just losing money. Uh so real estate uh ends uh what are they gonna do? They’re gonna let a ton of these leases expire and hopefully shore it up. As it relates to private equity and bankruptcy, that’s not surprising ’cause private equity is usually
0:18:40 let’s take all of its cash flows and use it to lever up such that we can have more upside and finance the acquisition with cheap debt. And when it doesn’t work, they declare bankruptcy. Now having said that, the the debtors of the bond holders charge a certain interest rate that calculate it in the risk of default. And when the bond holders when it defaults, the bond holders get to seize the assets. And when a private equity company or a private equity backed company has t you know, when it goes bankrupt, generally speaking the private equity all the equity capital they
0:19:10 put in they also get wiped out. So it does lever up and w you know go risk on on a company, but it also creates a certain sense of urgency. I think private equity has been good and not good for society. I’m not one of these people that says oh they’re ruining everything I. don’t think that’s true. There’s a lot of entrepreneurs who’ve made a lot of money selling a private equity and the thing I like about private equity is they’re usually very good at getting management vested in terms of the upside of success. They’re actually quite generous whereas venture capitalists I find are
0:19:40 primarily just, with rare exception, just mendacious fuck douchebags who pretend to give a shit about anybody and then wash the founders out. Speaking for a friend, um but so I like I enjoy working with private equity. I think debt tightens the focus, if you will, and most of the time these things, you know, it does make sense. And also there’s there’s two parties to the trade. The company doesn’t have to sell the private equity. They don’t they’ve it they’ve entered into this agreement knowingly. The people who are financing this
0:20:10 enter into this trade knowingly and are getting a good hopefully a good interest rate to reflect the risk. But this is a company that’s a shadow of itself. It sounds to me what I would wanna know is what percentage of their leases are coming up for renewal that we can get out of. Because that’s the obligation here that is most scary and that’s why a lot of retailers good retailers declare bankruptcy because then they can go and cherry pick and hold on to the leases they want and get out of the contractual agreements with the the leases that are
0:20:39 hurting them. So I p I wouldn’t be surprised I. bet this I p I wouldn’t be surprised if Sycamore actually does pretty well here. Do you wanna hear my C_V_S_ and opiate story Ed? My C_F_O_ came in at L_ two came into me and said I I need to speak to him. So I’m just like uh there’s some really crazy charges at drug stores all over Manhattan and and I looked at him I’m yeah this is not me this doesn’t make any sense I’m. like it must be fraud and she’s like no it’s not fraud, it’s your assistant. [SPEAKER_TURN]
0:21:05 And it ends up that my assistant was addicted to opiates and was going to every doctor in Manhattan getting a a script for opiates and then going into a C_V_S_ or a Walgreens and not only getting her opiates, but buying a thousand or two thousand dollars in cosmetics or gifts. And she was not only a criminal, she was a stupid criminal and she would sign for everything and have it delivered to her house where like [SPEAKER_TURN]
0:21:08 Yeah, uh we think it’s you. [SPEAKER_TURN]
0:21:19 think over five months or seven months a, hundred and twenty thousand dollars on my corporate card had various C_V_S_ and Walgreens all over Manhattan. And I remember calling her. [SPEAKER_TURN]
0:22:01 And not like that. I’m like she’s like, oh, I don’t know what you’re talking about. I’m like they you’ve signed for this shit at your address. Y y your signature’s on this stuff. You you decided to have someone drop it off at your apartment when she wasn’t like, you know, you’re not exactly a what I’d call a very, you know, this is this is disorganised crime. And she immediately went into rehab, claimed disability and tried to sue us for the options that we owed her. Um she dropped the case when I t said I was gonna turn it over to the Manhattan D_A_ if she didn’t drop the case. But anyways, that
0:22:05 That was my last assistant, uh. That was that was the that was my last assistant. [SPEAKER_TURN]
0:22:37 I’m glad we learned that. Yeah, it’s uh we learned a lot about hiring decisions on this show. Let’s talk about um Ontario and their decision to cancel uh the contract with Starlink. I think you predicted something like this would happen you, at least kind of warned about it that Starlink you, know, one big problem for Elon Musk would be if people start cancelling Starlink contracts. Kind of i in an incredible move. The premier of Ontario, Doug Ford, had some
0:22:39 interesting things to say about this and we’ve got a clip, so let’s take a listen.
0:23:26 one step further. We’re ri ripping up Ontario’s contract with Starlink. It’s done, it’s gone. We won’t award contracts to people who enable and encourage economic attacks on our provis province and our country. Kind of Bola uh your reaction Scott? [SPEAKER_TURN]
0:23:56 I think Musk, when he saw this, I think this probably sent a chill down his spine. If people start cancelling Starling contracts, I mean they’re already throwing shit at Tesla’s on the road. I just cancelled a Tesla last night on Uber. I’m starting to cancel if it if it’s a Tesla when it comes up. I think that the Canada I think this guy’s making the right move and I think you’re only gonna see more of it. I think people have just had it. What’s a shame is that we don’t have the same type of leadership here in the United States. There hasn’t
0:24:26 a single CEO has stood up and said, I am not going to participate in this pay for play kleptocracy. I’m not giving to the campaign. I am not going to be be paraded around. You either have laws that affect all of us or none of this, but I have had it. And we haven’t had anyone that shows the balls of this leader up in Ontario. And it is so disappointing the domino theory of cowardice that has infected the rich and fortune
0:24:41 I can’t think of one who has spoken out all under the auspices of quote unquote shareholder value Well. folks, your stakeholders include Americans. Uh it is incredibly disappointing that we aren’t showing a fractional leadership that this guy is showing. [SPEAKER_TURN]
0:25:11 I think you say I mean the domino theory of cowardice, I think this is basically showing that we’re about to see the domino theory of revolt. I mean this guy’s the first one to do it, and it’s only a hundred million dollars, which is not a big deal for Starlink, which did eight billion dollars in revenue last year. But Canada overall is Starlink’s second largest market behind the U_S_. They’ve got half a million Starlink subscribers in Canada. And I think what this shows is you know this guy’s the first to do it, but we’re gonna see a domino
0:25:41 and I think all of these other provinces follow suit I. don’t think you wanna be a leader in Canada who looks weak up against Donald Trump, and what we’re seeing is that the entire nation is sort of coming together and rallying against a common enemy, and there’s just this one stat I found fascinating from YouGov. Eighty two percent of Americans say they consider Canada to be an ally. In Canada, that number is now thirty three
0:26:07 I think this is what is gonna probably push Musk out of government or he he’s gonna decide he’s gonna try and declare victory and leave because if you look at Starlink customer base, I mean Tesla is already crashing. It’s it’s it’s literally imploding. Uh I don’t know if you saw there’s a video of uh Mardi Gras and someone uh t uh a Tesla truck or whatever you call it was rolling down and everyone started throwing shit at it.
0:26:40 Starlink was his growth vehicle, and there’s one and a half million customers of Starlink in the U_S_. You reference that there’s five hundred and thirty thousand in Canada, second largest market. That’s real. And then the number three market Mexico, at four hundred and thirty five thousand. And then the number four is Brazil, who probably doesn’t feel that great about Musk, who was who was threatening, you know, was fucking with their internal politics. So you know Starlink’s value in the private markets, it’s the most valuable company one of the most valuable
0:27:10 private companies and the most traded in the secondary market, and I think it’s a third of a trillion dollars, I think it’s trading at three or three hundred fifty billion, that number’s gonna come way down, because if they can’t show the kind of growth that they’ve been showing, also you are you are seeing a lot of you wanna talk about greed lands going, if I’m Telus if I’m Telesat or Explore the competitors, they have no trouble raising a shit ton of money right now.
0:27:16 And because there is about to be a big gap in the market place for this type of uh broadband provider. [SPEAKER_TURN]
0:27:20 So what happened with Twitter and then you saw all those Twitter competitors rise up and now threads is [SPEAKER_TURN]
0:27:24 Threads, blue sky, post, yeah, that’s right. [SPEAKER_TURN]
0:27:26 I mean some of them kind of failed. [SPEAKER_TURN]
0:27:35 You’re the one I invested in, but is that what you’re saying Ed? Is that what you’re saying the one I invested in? I I the one I managed to pick? Okay. Okay. Okay. [SPEAKER_TURN]
0:27:47 We’ll be right back after the break and a look at Blackrock’s investment in the Panama Canal. If you’re enjoying the show so far, be sure to give Prof G Markets a follow wherever you get your podcasts.
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0:31:28 Mm. Mm. Mm. Mm. Mm. Mm. Mm. [SPEAKER_TURN]
0:31:58 We’re back with Prof G_ Markets. A BlackRock-led consortium has acquired two major ports on both sides of the Panama canal for nearly twenty three billion dollars. The ports were previously owned by a Hong Kong-based conglomerate, but the deal still requires approval from Panama, which retains control of the canal. BlackRock CEO Larry Fink personally pitched the deal to Trump after the president expressed interest in having the ports and the canal controlled by the U_S_. Uh Scott, you’re
0:32:05 initial reactions to BlackRock buying those ports from this company C_K_ Hutchison. [SPEAKER_TURN]
0:32:35 on the face of it, it sounds like a great idea. I mean if you think about the most valuable companies in the world are essentially toll booths, right. Amazon makes a ton of their money sort of saying, alright, rent our cloud services, but the real toll is that if you wanna have access to half of the U_S_E_ commerce market, you gotta be on our platform. And then we just collect a toll. It used to be twenty four percent of third party revenues when you, you know, put your shoe company on their platform, now it’s about they get forty five percent ’cause you have
0:33:05 one toll road, they’re the toll booth. If you wanna reach uh online consumers, there’s two big toll booths. There’s uh Meta and there’s Google. They collect a toll to reach every consumer that’s increasingly spending their day online. So I love this idea of an analog toll that says okay, we get you coming and going across this incredible feed of engineering and leadership, the Panama Canal. But you gotta think to get to propel through the water a several thousand metric
0:33:24 vessel and have it go another whatever it is, six thousand miles or eight thousand miles around this thing versus just slip through the little that little ditch we dug through Panama. If they can figure out a way to collect money on the in and the out I’ve, never heard a transportation company say the Panama Canal’s gotten too expensive, so we’re just gonna take the long way. [SPEAKER_TURN]
0:33:54 Yeah. I think we should just like remind ourselves of the context here. I mean I think everyone probably knows a couple months ago Trump said he wanted to reclaim the Panama Canal. He said the Panama Canal had been taken by China and that America needed to take it back and then there was that notorious moment where he was asked if he would use military force to take it over and he didn’t rule it out. Now of course it’s not true that China owns the Panama Canal, but it is true that there are companies
0:34:24 with ties to China, which own and control many of the ports that are in the Panama Canal. And one of those companies is this company we’re talking about, C_K_ Hutchison, which is this company based in Hong Kong, it’s owned by this billionaire Li Ka-Xing, and now they are selling those ports that are on either side of the canal to Blackrock. Now there’s been some questions around how much does this have to do with Trump, how much does this have to do with geopolitics, and one of the heads of C_K_ Hutchison
0:34:54 which owns the ports. Uh he said it has nothing to do with Trump. He said, quote, I would like to stress that the transaction is purely commercial in nature and wholly unrelated to recent political news concerning the Panama ports. I just wanna get this out of the way. That’s of totally a lie. No question about it. This had everything to do with politics. It’s been extensively reported that this company only started looking to sell right after Trump made those comments about Panama
0:35:24 about China. So let’s just be clear from the get-go, this is one hundred percent a geopolitical response. There’s no there’s no doubt about it. Having said that, I think what the guy at C_K_ Hutchison is trying to get at is that from a commercial perspective, this was an amazing deal for them. The origins of the deal were political, but the result was a success, because the value of those ports that they sold as determined by analysts was thirteen billion dollars. They
0:35:54 it for twenty three billion. So they got a nearly eighty percent premium on those assets. That is huge. And by the way, twenty three billion is more than the entire market cap of the company before the deal. And as a result, shares in the company skyrocketed. They were up twenty percent. So it’s a huge success for this company, C_K_ Hutchison And. and I think that begs the question, okay, they sold it for eighty percent above market value. Why was Black
0:36:14 down to pay? Why were they down to splurge that much in what is now the largest infrastructure deal in the company’s history? How did that make sense to them? And I have some initial thoughts, but I’ll I’ll f I’ll throw it back to you. What do you think was the draw for Blackrock here? [SPEAKER_TURN]
0:36:27 I would have just thought that they believe that their average price per vessel of three hundred and forty one thousand that’s charged to get through the Panama canal, that they believe they can take that three fort forty one number much higher. [SPEAKER_TURN]
0:36:44 No, I think what’s in it for Blackrock and what made this worth it is what it does to their relationship with the president, because he looks excellent now. You know, he was talking about how he wants the U_S_ to control the Panama canal and people were ragging on him saying this guy doesn’t know what he’s doing, and
0:37:14 pulled it off and at no cost to the government. The whole thing was paid for by Blackrock. And you there is no denying this only happened because of him. So he looks like a genius now. He gets to brag about it in his speeches. In fact, that’s exactly what he did in his address to Congress. And most importantly, I think he is now grateful to Larry Fink and to Blackrock, who are officially in his good books now. And that’s r so
0:37:44 because for a long time they weren’t. This is the company that spearheaded the E_S_G_ movement, that told investors that’s D_E_I_ is central to everything they do. This is the company that just generally speaking the Republicans hated. And so I think Larry Fink saw this opportunity, there was a chance to get on Trump’s good side uh to make him look like the hero, and it only cost him, you know, a few billion dollars. So in my view
0:38:05 was probably worth it. I didn’t immediately connect that this gets them in Trump’s good graces, but I can see the argument, if so, I can’t imagine they would make this sort of capital outlay. I think that would be being a bad fiduciary just to cozy up to a guy who’s gonna be in office another three years or nine months and quite frankly in about two years. [SPEAKER_TURN]
0:38:14 Don’t you think that is an economic d decision at this point? I feel like what we’re seeing with these companies is actually it is your fiduciary obligation to suck up to the president. [SPEAKER_TURN]
0:38:37 I think your analysis is more thoughtful than mine. I just assumed that if they could put a toll booth on both sides of the Panama Canal that if you do the math, I would bet it costs a lot more than a an incremental three hundred forty thousand dollars to take that ship around, take it to go the long way. And they sense that and say alright, we’re capturing ten percent of the savings here, we should be capturing thirty or forty percent. [SPEAKER_TURN]
0:39:07 Fair enough. I ju I I think in the context of what they’ve been doing recently, I mean just a couple months ago we didn’t discuss this on the podcast, but they withdrew from this climate initiative with the United Nations. They also they just released their annual report. They cut all references of D_E_I_ in their report. They backpedalled from E_S_G_ a ton. And this is just a t huge turnaround from twenty twenty one when they were kind of leading this charge. Like they were at the
0:39:29 forefront of D_E_I_ and E_S_G_. I’ll quote Larry Fink in their twenty twenty one annual report. He said quote, we must embed D_E_I_ into everything we do. And then poof, suddenly the D_E_I_ is gone, suddenly the E_S_G_ is gone, and he’s making phone calls to the Trump saying hey, that thing you’re talking about, this Panama thing, we’re really interested and we think we can represent the U_S_. [SPEAKER_TURN]
0:39:58 I’ve switched. I’m now, when I’m interviewing people, I’m saying oh, he’s a D_U_I_ hire. Um yeah, I’ve never had a D_U_I_ I’m. thanks for that. Now back in the eighties and nineties we always get fucked up and take to Sunset Boulevard and basically death traps. But anyways, ha, good times, youth, youth. We’ll be right back with a look at Apple. And if you’re enjoying the show so far, hit follow and leave us a review on property markets. [SPEAKER_TURN]
0:39:59 Mm-hmm.
0:40:06 Mm-hmm. [SPEAKER_TURN]
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0:41:14 I’ve been asking some very smart people a question that’s been on a lot of our minds. Should we be worried about artificial intelligence? But the answers I got from the greatest minds in A_I_ surprised me. One guy told a parable of an A_I_ that could cause an apocalypse. [SPEAKER_TURN]
0:41:19 Let’s give this super-intelligent A_I_ a simple goal. Produce paper clips. [SPEAKER_TURN]
0:41:48 Be a paper clip. Another woman cast A_I_ as an octopus. We posit this octopus to be mischievous as well. And yet another story sounded like it was out of the Bible. She seems likely to drown What. should you do? Imagining A_I_ as a saviour. And all of these fantastical tales from the greatest minds in A_I_ made me wonder maybe even these people don’t know what to think.
0:41:58 I’m Julia Longoria, Good Robot. A series about A_I_ coming March twelfth on Unexplainable, wherever you get podcasts. [SPEAKER_TURN]
0:42:33 We’re back with Prof
0:43:06 And this news in and of itself is not very interesting or important. There’s a new MacBook Air out who, cares. But I think the reason it’s worth covering is because to me it’s indicative of just how far Apple has fallen from a product perspective. I just wanna go through the new features in this computer, this grand MacBook Air release. So the new features include a new and improved M_ four chip, okay, a new and improved video
0:43:30 camera, it can connect to three external monitors, it comes in a new colour, sky blue, and that’s it. Those are the impressive new features of the new MacBook Air. And by the way, the iPad Air which came out in the same weekend, also very underwhelming, their big new update is an A_I_ e-mail summarisation feature for quote more stable typing experience.
0:43:37 This is the company that invented the iPhone Wh. what happened Scott? [SPEAKER_TURN]
0:44:07 Yeah, this is a giant s snooze. And just in terms of what uh I’m doing, I’m actually selling starting to sell my Apple stock. Apple and Amazon have been my biggest holdings for the last fifteen years. I bought Apple when it was trading at a P_E_ of nine, and now it’s trading at a P_E_ of thirty seven. Yeah, I think it historically has traded an average around eighteen. And trailing twelve months, it’s thirty seven or thirty eight. Forward earnings, it’s thirty one thirty two. And it’s growing two
0:44:37 And quite frankly its product line-up is just anemic. And in addition the overlay there is I do believe that we’re gonna see the rivers uh the flow of the river of capital into the U_S_. I think those rivers are about to reverse. We’ve talked about it uh ad nauseam on the show. So I um I’m gonna take the the capital gains hit and I am selling down my Apple and my Amazon which are trading at extraordinary multiples. And I don’t with Amazon you could sorta justify it I think ’cause of their cloud business. Apple’s
0:45:07 arguably the best brand in the world, but company’s no longer growing. I think the the mixed reality headset was just just uh c uh comical. And so in this notion of spatial computing, it’s gonna be the next thing. I mean they’re they’re well set up for A_R_ They’re. they’re gonna be a relevant company for a long long time. Let me go this way. I don’t see how they can justify a P_E_ of thirty seven or thirty eight on on a company that’s not growing, it’s top line revenue.
0:45:15 So is it a great company? Is it gonna continue to be really relevant? Yeah, it just I just don’t I just think it’s overvalued right now. [SPEAKER_TURN]
0:45:45 Yeah, my perspective is pretty much identical to you. I think this is kind of the final straw for me. I’ve been waiting for Apple to get their mojo back. But every single announcement is just such a snooze. And yeah, this is the final straw. I think I’m I’m I’m officially bearish on Apple. I think that’s the right move to sell or at least trim your holdings. By the way, that’s what Booch Hathway did last year. I think it was probably the right move. I think the stock will fall below two hundred dollars in the next six months. Maybe the
0:46:15 next twelve. I think there are just two major problems with Apple. The first is the products, and the second is, as you say, the valuation. And let’s just go over the products here. Every iPhone today looks the same as it did ten years ago, and the same can be said of the iPad, and the same can be said of the MacBook. The only innovation we’ve seen from a hardware perspective with Apple is this headset, which so far has been a disaster based on all the data that we know about. The
0:46:45 other exciting product was the Apple Car, which they cancelled last year. So they’re not growing from a hardware perspective. And by the way, I I think this is why we’re seeing all these ridiculous ads from Apple. I don’t know if you saw their Super Bowl ad, but it was this this this video talking about their gen-moji feature, which is basically they’re using A_I_ to allow users to create new emojis, and they also have these billboards plastered all over New York. You’ve probably seen
0:47:15 And it’s kind of embarrassing, I think, from the company. I think the reason they’re doing it is ’cause they have nothing else to advertise. We could talk about their software as well, which has been underwhelming. They just did this new I_O_S_ update. People don’t like it. I also don’t like it. I think one of the worst changes they did was to the photos app, which I don’t know if you’ve used it recently. It’s just it’s extremely unintuitive. Siri is terrible. It was supposed to compete with charge E_P_T_. It it it won’t. Apple music is failing compared to Spotify. Apple podcast is
0:47:45 doing, compared to Spotify and compared to YouTube. In some, the products aren’t exciting anymore. And then there’s this added layer of the valuation, which we can talk about it. Trading at thirty eight times earnings. The company is still valued as a growth company, and I just wanna put it in perspective with other companies. Thirty eight times earnings, that is higher than Microsoft, whose revenue is growing at sixteen percent. It’s also higher than Meta, whose revenue is growing at twenty two percent. It is very close to
0:48:15 valuation of Nvidia, which trades at forty times earnings, and they’re growing at a hundred and fourteen percent. Apple’s revenue last year grew two percent. It’s flatlining So. uh this is a long way of saying I I’m I’m very aggressively with you on this. I don’t think the valuation makes sense. I think the only way you can justify that multiple for Apple is if you really believe in Apple intelligence and the A_I_ play. If you believe that A_I_ is just
0:48:45 to absolutely turbo-charge all of their products and make them exciting again. But I would just burst that bubble once again and say they just released Apple Intelligence, forty one percent of iPhone users didn’t bother to try it, and of those that did, seventy percent said they don’t like it. So th I don’t see how we can we can justify this as a growth company anymore. I think this is officially a mature company, which means that it should be valued as a mature company. I don’t think this can continue. [SPEAKER_TURN]
0:49:01 Yeah, it’s interesting, and it’s easy for me to say because it’s these are b it’s a very difficult business, but if Apple were coming out with its Project Titan, if Apple were just about now and it w if it is not cancelled Titan, it would have been coming out with a card just about now, can you imagine how well positioned they would have been against Tesla? [SPEAKER_TURN]
0:49:02 Yeah, exactly. [SPEAKER_TURN]
0:49:33 I think they would have found the justification for that P_E_ just in the the customer list. I think they would have built the most valuable customer list or waiting list in history. And that is I think several million people would have come up with five or ten grand just to be on that waiting list and they could have said uh I think that would have justified when everyone was trying to justify the thirty eight P_E_ which they’re gonna run out of reasons to justify, I think they could have pointed to that list. And the self expressive benefit brand of Apple which, immediately identifies you as one of the wealthiest, most creative
0:49:56 fourteen percent of the globe because a billion people have I_O_S_ The. other real self expressive benefit item in people’s lives that they’re willing to spend a lot of money on is their car. So I just think the Apple car would have been the most elegant way to say I’m creative and wealthy and I think they they would have done a good job, they could have outsourced the manufacturing. Anyways, I think they are kicking themselves that they didn’t go the distance around Titan. [SPEAKER_TURN]
0:50:04 Just in terms of your decision to sell, when did you officially make that decision and also just on a slightly separate point, what are the tax implications there? [SPEAKER_TURN]
0:50:34 The tax implications are ugly because I bought Apple at about eight bucks a share or twelve bucks a share. So I’ve recognised a huge gain. I’ve sold some along the way, but there’s just not getting around it. I’m gonna have to pay twenty two or twenty three point eight percent taxes, which isn’t enormous, but I think it’s worth it. Um and my decision was uh I have a friend of mine who runs a hedge fund that I actually has my biggest allocation called Elena Partners, a guy named Orlando Marchant who was a tiger cub and now manages money for
0:51:04 on my offices. And he’s just been sending me all these graphs about just how incredibly expensive U_S_ growth is and how inexpensive the rest of the world is. And the stat that has just blown my fucking mind is that if you were to price all U_S_ assets, they would be seventy dollars, including their equity value and their debt. And if you were to price the rest of the world, sans the U_S_, it’d be thirty dollars. So would you rather own the U_S_ at seventy bucks or the rest of the world for thirty? And that I am acting on that. I am selling down my U_S_ growth portfolio and I’m investing in Europe. The
0:51:30 is I’m already a little bit late. Europe is up I think eleven or twelve percent. The EU, you know, the EU markets are up um substantially and the U_S_ is flat. But I’m rotating out of the U_S_ and my kind of growth plays. I have I’m overexposed in growth ’cause I invest in a lot of private companies in the U_S_ but I’m gonna d I’m gonna get out of Amazon and Apple and reallocate that capital into Brazilian and European stocks. [SPEAKER_TURN]
0:51:34 What percentage of your Apple holdings will you sell? [SPEAKER_TURN]
0:51:57 I’ll probably sell all of it. Yeah, I think I’m probably gonna sell all of it. [SPEAKER_TURN]
0:52:04 Ten bucks an
0:52:34 The the reality is tech. You’re an investor in tech. You’re an investor in U_S_ tech. People who are tracking South African value stocks aren’t listening to this podcast. People who track American markets which are dominated by tech are listening to this podcast. Meaning that you at ELSEN, if you were really really smart about diversification, you would not be investing in U_S_ tech. Because you are very tit this is what I didn’t understand when I was your age. I was so over-invested in U_S_ I I running a brand strategy firm in
0:53:04 in Northern California, my entire livelihood was tied to the fortunes of tech. All my clients were either Kleiner Perkins portfolio companies or H_P_ or Apple or, you know, I had these big kind of U_S_ tech companies and then because that’s what I knew and I thought oh, this is this is where the future is, I’d take all my access cash flow and I’d buy tech stocks. So when two thousand came, uh I w ended up going from being worth a lot of money for a thirty a thirty year old thirty six to
0:53:21 uh being worth negative two or three million dollars in the space of about three months. So we are over-invested uh in U_S_ tech by virtue of the fact of what we do for a living. So I’m going to take uh many of my li and basically everything that’s not nailed to the ground right now and get out of U_S_ growth in tech. [SPEAKER_TURN]
0:53:26 Well next time I’m gonna need to hear what those actual European companies are because I look at the European [SPEAKER_TURN]
0:53:34 I’m gonna go into an index. I might go into a levered index from Drexel, but I’m gonna go into a diversified mixed E_T_F_ or index around E_U_ value stocks. [SPEAKER_TURN]
0:53:42 And are there any companies in the in the index or any any companies that you’re seeing in Europe that you think oh yeah they’re g they’re doing well. [SPEAKER_TURN]
0:54:12 Well, I mean I just like a lot. I think, you know, Mercedes is a great company, trading at a fairly low multiple. Porsche is on sale relative to where it was. Uh L’Oreal is an amazing company. Shell, B_P_ you know, there’s just there’s a lot of um you know, L_V_M_H_ has come off a lot. That’s not value, but it’s come off a lot. Uh it there are a lot of great uh European companies. I’m very excited about Europe. A lot of this is confirmation bias. But I think Europe has been you know, we hav we’ve had this conversation. Europe has been left for dead. It’s not. Yeah, I
0:54:35 a lot of time in Europe, incredible universities, a lot of very hardworking people. It doesn’t have the risk capital, it should, but I think that’s gonna change. I think P_E_’s getting their green glands going. And I think they’re finally gonna start acting like a union and take advantage of their size. So I’m very excited about Europe and I’m very uh you know, the bottom line is Europe American, tech is still gonna do really well. It’s just too fucking expensive.
0:54:48 Let’s take a look at the week ahead. We’ll see the consumer and producer price indices for February, and we’ll also see earnings from Oracle, Adobe, and Williams-Sonoma. Scott, do you have any predictions?
0:54:50 I want you to make a prediction out of it, and I think you just made one.
0:55:21 my prediction would be that Apple is sub two hundred dollars in the next six months. I think that their numbers are flatlining their, hardware revenue is down and they’ve been leaning on a narrative and I think that narrative is fizzling out because you could just look at their products and you can look at their ads. It’s becoming very clear this is a very mature and increasingly uninteresting company. I’m not sure how I feel about you selling all of to Apple. I’m also not sure how I feel about you going totally
0:55:33 out of U_S_ growth entirely, I think there are still there’s still a lot of value in U_S_ tech in companies like, you know, Nvidia and Google for, example I’m, pretty bullish on. But Apple, I think that’s probably a good idea to trim. [SPEAKER_TURN]
0:55:49 So I’m excited to see you in Texas. The last time I was in Texas I was in Lubbock and I came across a sheep farm and there was a farmer fucking a sheep on the side of the road and I said in New York we we uh we shear sheep and he said I’m not sharing her with anyone. [SPEAKER_TURN]
0:55:53 I’ll see you in Austin. I’ll see you in a great state of Texas. [SPEAKER_TURN]
0:55:56 This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mia Silverio is our research lead Isabella Kinsell is our research associate, Drew Burrows is our technical director and Catherine Dillon is our executive producer. Thank you for listening to Prof
0:56:26 you.

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0:01:02 On this week’s episode of “Networth and Chill,”
0:01:06 I’m chatting with Internet sensation and everyone’s favorite filly influencer, Bran Flakes.
0:01:10 He’s a social media maverick and content creator turning viral moments into cold, hard cash.
0:01:14 Listen wherever you get your podcasts or watch on the Yorich BFF YouTube channel.
0:01:19 I’m Skye Galloway, and this is No Mercy, No Malice.
0:01:24 U.S. Democrats and moderates need less indignance and more ideas.
0:01:28 Project 2028, “Housing,” as read by George Hahn.
0:01:47 Democrats need to be the party of ideas, not indignation.
0:01:53 Our Project 2028 series will address critical issues facing American society
0:01:56 through a no mercy, no malice lens.
0:02:00 We begin with housing.
0:02:05 The U.S. doesn’t have a housing crisis, but an affordability crisis.
0:02:12 Roughly one-third of Americans rent, and nearly half are cost-burdened, i.e. they spend 30%
0:02:16 or more of their income on housing.
0:02:25 Since 2019, rents have increased 1.5 times faster than income in most U.S. metro areas.
0:02:31 In purely economic terms, increased housing costs reduce labor mobility and productivity
0:02:35 as workers can afford to live in high-growth areas.
0:02:41 When human capital can’t be invested in the regions offering the greatest returns, it
0:02:43 dampens growth.
0:02:49 One research project estimates that removing housing constraints, i.e. lowering costs,
0:02:58 to increase the liquidity of human capital would increase GDP by $1.4 trillion.
0:03:04 In sum, there may be an economic as well as a social justification for government investments
0:03:06 in housing.
0:03:11 Elevated housing costs also take a toll on health, as families who struggle to afford
0:03:16 housing often delay medical care, eat less healthy food, and have higher levels of anxiety
0:03:18 and depression.
0:03:28 But the most catastrophic consequence of unaffordable housing is that 770,000 Americans are homeless.
0:03:34 According to one study, communities where the median rent is more than 32% of the median
0:03:40 household income are likely to see sharply higher rates of homelessness.
0:03:46 But no matter where they live, homeless people suffer intense physical and mental harm, put
0:03:51 a disproportionate burden on public services where they live, and reduce the quality of
0:03:54 life for all citizens.
0:04:03 The common denominator for struggling renters and the homeless is an identity but money.
0:04:08 Increasing support for Section 8 housing and rent control may provide short-term relief,
0:04:14 but in the long term, these programs become entrenched and suppress development.
0:04:21 The quickest way to help poor people afford housing is simple – pay them more.
0:04:28 As I’ve written before, I believe minimum wage should be $25 per hour.
0:04:33 There are approximately 32,000 homeless veterans in the U.S.
0:04:39 While vets account for only 5% of the total homeless population, housing them is a good
0:04:44 place to start, as they’re politically popular and have access to benefits.
0:04:51 A federal no-homeless vets pilot program could be a platform for testing solutions.
0:04:56 It could also provide what’s missing in American politics right now – renewed confidence
0:05:01 that the government can take on big challenges.
0:05:07 Honing a home marks one’s progression into adulthood, starting a family, and building
0:05:08 wealth.
0:05:13 But for many Americans, the American dream has become a hallucination.
0:05:16 This is especially true for young people.
0:05:26 Between 1984 and 2024, the age of the typical first-time homebuyer jumped from 29 to 35.
0:05:33 Since 1963, home prices have increased three times after adjusting for inflation, while
0:05:38 the median household income increased about one and a half times.
0:05:44 Nationally, the average home price-to-income ratio is 4.7.
0:05:52 It’s significantly higher in California at 8.4, Washington at 6.3, Massachusetts at
0:06:01 6.3, New York at 5.7, and Florida at 5.7.
0:06:07 Housing experts say we need to build somewhere between 1.7 million and 7.3 million additional
0:06:09 housing units.
0:06:15 In the same way Ernest Hemingway described the process of going bankrupt, we got here
0:06:16 gradually.
0:06:21 Then suddenly, as the pace of home building has yet to fully rebound to the rate before
0:06:29 the Great Recession, increased costs for labor, building materials, and regulatory compliance
0:06:32 have all contributed to the problem.
0:06:39 The cost of building multifamily housing in California, for example, spiked by 25 percent
0:06:42 between 2010 and 2020.
0:06:49 Nationwide residential construction costs rose 19 percent over the same period.
0:06:53 Construction costs have stabilized since the pandemic.
0:07:00 Labor costs grew 3.8 percent over the past year, while the cost of materials was flat.
0:07:06 Mass deportations and tariffs, however, will likely increase the cost of both labor and
0:07:09 materials.
0:07:14 Democrats don’t have the power over tariffs and immigration, but they can champion cost-effective
0:07:17 building.
0:07:24 Manufactured homes, which are built in factories and finished on site, are 35 percent to 73
0:07:28 percent cheaper than homes built entirely on site.
0:07:33 In Los Angeles, many homeowners can afford to rebuild after the fires, as quotes for
0:07:38 new construction can be two times or more what insurance will cover.
0:07:46 A partnership between a nonprofit and manufactured home startup aims to donate 100 pre-built
0:07:51 homes that cost around $260,000 each.
0:07:58 To rebuild LA quickly, local leaders should hyperscale this kind of building.
0:08:03 When I interviewed housing economist Jenny Schuetz on my podcast, she told me housing
0:08:08 policy is relatively simple, but the politics are hard.
0:08:16 Case in point, around 75 percent of residential land in the U.S. is zoned exclusively for
0:08:23 single-family homes, the most costly and least dense type of housing.
0:08:29 Re-zoning for multi-family housing and taller buildings would make it easier to build.
0:08:35 At the federal level, the Bipartisan YIMBY Act encourages block grant recipients to
0:08:39 track and remove barriers to housing construction.
0:08:45 HUD grants along the lines of pathways to removing obstacles to housing, which Congress
0:08:53 authorized $85 million for in 2023, have helped localities purchase land for affordable housing,
0:08:59 streamline the building application process, and add local staff to fast-track affordable
0:09:01 housing proposals.
0:09:04 We should double down.
0:09:09 Likewise, we should pass the Bipartisan Housing Supply and Affordability Act, which would
0:09:19 allocate $1.5 billion in technical assistance to overhaul local zoning rules.
0:09:23 Local governments and neighborhoods, however, hold most of the power here.
0:09:29 Reform is costly and time-consuming, as new rules must contend with a confusing legislative
0:09:31 labyrinth.
0:09:36 The effects of an overlawyer process are most apparent in blue states.
0:09:42 A significant number of Californians left for Texas in search of jobs and affordable
0:09:47 housing, the chocolate and peanut butter of economic growth.
0:09:53 To win national elections, Democrats need to demonstrate that they can govern.
0:09:55 The winning move?
0:10:02 Go hard at zoning reform, cut red tape, and encourage development.
0:10:07 Such a pivot could make for strange bedfellows, zoning reform means taking on environmentalists
0:10:11 and wealthy homeowners.
0:10:17 The standard property tax model imposes taxes on land and structures.
0:10:22 This discourages building, since new construction will be taxed.
0:10:28 We should reverse the incentives and tax only undeveloped land, encouraging development
0:10:33 while cutting taxes on existing homes.
0:10:37 The idea has been proposed in Detroit and New York City to reduce the number of vacant
0:10:40 lots in those cities.
0:10:45 In Pennsylvania, several cities have used a similar split-rate tax that taxes structures
0:10:49 at a lower rate than land.
0:10:55 One study found that split-rate tax models can increase high-density housing units between
0:10:58 2% and 10%.
0:11:04 Embracing the strategy could rebrand Democrats from tax and spend liberals to tax-cutting
0:11:06 builders.
0:11:12 This week, the California legislature released a report examining the state’s failure to
0:11:14 build enough affordable housing.
0:11:16 The author’s conclusion?
0:11:23 The planning process is slow, crippled by red tape and vulnerable to frivolous lawsuits,
0:11:27 making it too damn hard to build in the Golden State.
0:11:35 Exhibit A. In 2024, the state’s Supreme Court resolved a three-year battle over a 1200-unit
0:11:38 Berkeley housing project.
0:11:42 Neighborhood groups argued that the noise predicted to come from college student housing
0:11:46 amounted to a pollutant under the law.
0:11:51 The neighborhood groups lost, but the case illustrates the larger problem.
0:11:57 By the way, UC Berkeley has been there longer than any resident and the scarcity model weaponized
0:12:02 by administration’s departments and existing homeowners is morally bankrupt.
0:12:05 But that’s another post.
0:12:12 NIMBY homeowners have fashioned a state law, the California Environmental Quality Act,
0:12:16 into an anti-growth cudgel.
0:12:23 A California Legislative Analysts Office study found that CEQA litigation delayed construction
0:12:26 by two and a half years.
0:12:34 Only 20% of CEQA lawsuits target greenfields, i.e. converting open space to housing, while
0:12:44 85% of CEQA lawsuits were filed by groups with no track record of environmental litigation.
0:12:50 A California state senator has introduced legislation to fast-track CEQA cases.
0:12:57 Lawmakers in states and localities with similar laws should follow suit.
0:13:04 Rents in Minneapolis increased by only 1% between 2017 and 2022, largely because developers
0:13:09 increased the housing stock by 12% during the same period.
0:13:16 Meanwhile, rents in the rest of Minnesota, which only boosted housing stock by 4%, increased
0:13:19 by 14%.
0:13:21 The Unlock?
0:13:28 Minneapolis reformed zoning laws to encourage taller multi-family housing projects and eliminated
0:13:33 parking minimums that can cost $50,000 per space.
0:13:40 It’s a similar story in Austin, where city officials waged a decade-long political fight
0:13:44 to tackle housing affordability through rezoning.
0:13:50 Americans’ new rules allow for single-family homes to be built on smaller lots, apartments
0:13:56 to be built closer to single-family homes, and denser development along a planned light
0:13:59 rail line.
0:14:04 Nimby homeowners tend to be loud and politically connected, giving the impression that their
0:14:08 views represent the broader community.
0:14:10 That is not the case.
0:14:16 YouGov polling suggests that Americans may be more receptive to local development than
0:14:19 previously thought.
0:14:28 Support for building more single-family homes polls at 90% nationally, 81% locally.
0:14:33 For senior housing, national support polls at 88%.
0:14:37 Local support is 84%.
0:14:44 Nearly 76% of Americans want more apartments built, while 65% support building more apartments
0:14:46 locally.
0:14:51 Low-income housing and homeless shelters are the least favored housing types, but even
0:14:55 there local support polls at 2 to 1.
0:15:02 If you’re a politician, you’ve been given a green light to ignore nimbies.
0:15:08 Despite the conventional wisdom, people lose money in real estate.
0:15:13 Homes are illiquid capital-intensive assets that come with phantom costs – insurance
0:15:19 premiums, maintenance bills, and property taxes, all of which are expected to rise due
0:15:21 to climate change.
0:15:28 Owning also limits diversification, as homes are close to workplaces, meaning a local economic
0:15:34 downturn or a natural disaster could wipe out your equity at the same time you lose
0:15:36 a job.
0:15:45 Historically, the S&P averages a 10% annual return, outpacing housing at 4% to 8%.
0:15:52 Moreover, real estate brokers typically charge around a 6% commission – 60 times the transaction
0:15:58 cost you’d pay for a low-fee ETF that tracks the S&P.
0:16:03 The advantage of home ownership is forced savings, as people don’t want to risk the
0:16:06 hassle and shame of eviction.
0:16:12 Another advantage – owning can stabilize monthly housing costs relative to rents.
0:16:19 I like real estate, as no other asset class allows you to lever up 5 to 1 with a low downpayment
0:16:22 and a deductible interest rate.
0:16:29 But the idea that home ownership is the best or only way to build wealth is a lie fomented
0:16:34 by the National Realtors Association that needs to die.
0:16:40 This lie leads to dubious financial advice for the people who buy homes that don’t outperform
0:16:46 the market, and it makes those who aren’t able to buy feel like failures.
0:16:52 But the most toxic byproduct of this lie is that it encourages incumbents to inflate the
0:16:57 value of their assets by making housing scarce.
0:17:04 Americans want to build wealth, and Democrats should speak in aspirational terms.
0:17:09 But if housing is the primary or only vehicle for wealth accumulation, we shouldn’t be
0:17:15 surprised that our political fault lines are rich against poor, rural against urban, and
0:17:18 old against young.
0:17:24 If economic security is the nutrition of a capitalist society, then maybe we need to
0:17:34 stop thinking of housing as an investment, but a consumable, like food, energy, education.
0:17:39 The construction of millions of low-cost units for young people, coupled with tax-advantaged
0:17:45 incentives to invest in the market, would result in a better path to wealth.
0:17:51 In addition, we need to remove housing from the growing list of sources of anxiety for
0:17:53 young people.
0:17:58 It’s housing, not an investment strategy or the arbiter of whether you’re worthy
0:18:03 enough to mate, start a family, or earn status.
0:18:09 Economic security and deep and meaningful relationships are the American dream, not
0:18:11 a mortgage payment.
0:18:22 The call sign for the next administration should morph from drill-baby-drill to build-baby-build.
0:18:23 Life is so rich.
0:18:33 [Music]
0:18:41 [BLANK_AUDIO]

0:00:04 There’s over 500,000 small businesses in B.C. and no two are alike.
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0:00:32 It might be enticing to try and sleep through the next four years,
0:00:37 but if you’re wondering how to survive a second Trump term while staying fully conscious,
0:00:42 HOD Save America is here to help you process what’s happening now and what comes next.
0:00:47 Every Tuesday, Wednesday and Friday, John Lovett, Tommy Veter, John Favreau, and Dan Pfeiffer
0:00:52 wait hip-deep into the week’s political news and fish out some political analysis you can trust.
0:00:55 Yes, Tommy’s shoes get ruined.
0:01:01 Yes, he’ll do it again tomorrow because the endeavor is worth it, and so is your sanity.
0:01:05 Tune in to HOD Save America wherever you get your podcasts and on YouTube.
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0:02:17 Episode 339. 339 is the area code serving the Boston, Massachusetts area in 1939,
0:02:21 the Wizard of Oz, from a true story, whenever I climax with a woman,
0:02:33 I scream out, surrender Dorothy, or I’m melting. I’m melting, melting. Go, go, go.
0:02:43 Welcome to the 339th episode of the PROP G-POP. What’s happening?
0:02:49 The dog is howling. He’s busy. He’s like one of those Belgian Malinois dogs. It is not happy
0:02:54 unless it’s working all the time, like roaming property or defending someone. I accept, I’m not
0:02:59 like that, but I basically have the tasks of a Belgian, of a Belgian Malinois. And that is,
0:03:04 I have so much shit going on today. I flew in last night from Barcelona, got in late,
0:03:09 came here, took an edible crash for like five hours. Now I’m up. I’m at the Fayena Hotel,
0:03:14 which I love. Even though it’s not really my design aesthetic, it’s like a very
0:03:21 handsome, wealthy, metrosexual Buenos Aires exploded into a hotel, which I think is pretty
0:03:26 much the owner of this hotel. And then I got to do this and I’m going to this conference,
0:03:31 this 0100 conference to host a lunch. Then I got a bomb up to Palm Beach where I’m doing a speaking
0:03:38 gig. Then I’m on a plane in New York and wash rints and repeat. But anyways, I’m in Miami. It’s
0:03:43 absolutely beautiful. Isn’t good to know what I’m up to? Thank God I know where he is. Thank God I
0:03:48 know what’s going on here. Anyways, what are we going on? Today’s episode, we speak with Dr. Anna
0:03:52 Lemke, professor of psychiatry at Stanford University and author of the best-selling book,
0:03:59 Dopamine Nation, Finding Balance in the Age of Indulgence. We discussed with Dr. Lemke the rise
0:04:02 of addiction in the digital age from drugs to social media and why our brains are wired to
0:04:08 create more. Plus, Dr. Lemke shares practical solutions to help build a healthier relationship
0:04:15 with pleasure. I really enjoyed this conversation. You occasionally interview somebody, especially
0:04:20 it’s so rewarding when you interview someone in the sciences, in the public health field.
0:04:24 And you get the sense they genuinely care that they want to figure this stuff out,
0:04:29 they want to help people. And she highlighted something we did this interview, I think about a
0:04:37 week ago, about a lot of young men are just a lot of men have addictions to porn. And there’s a lack
0:04:42 of peer-reviewed research on it because very few academics want to be known as the porn professor.
0:04:50 And just literally after she highlighted what an issue it has become for many of her patients,
0:04:54 I have had no joke, three men come up to me and start talking to me and we start talking about
0:04:58 addiction. And they look around and in their very self-conscious, they say, “Well, I have an addiction
0:05:02 problem.” And we start talking and I’m pretty straightforward. I said, “What’s your addiction
0:05:09 problem?” And all three times it’s been porn. And I want to learn more about it because it’s
0:05:14 something that I don’t think we talk a lot about. And there’s very little peer-reviewed research.
0:05:19 And as we think about men, especially young men and the access to this type of porn,
0:05:27 I’ve often said that the nicest thing in my life is getting to raise children with a competent
0:05:34 partner. If you can figure that out, if you can find someone who you share values with,
0:05:38 that you’re aligned with around money and that, quite frankly, you want to have sex with,
0:05:43 and you are blessed with healthy children, that’s kind of the whole shooting match. Or at
0:05:48 least that’s what I’ve decided is a whole shooting match. Everything else for me was just like a
0:05:52 means to an end. And I was never sated. I was wanting more and more money, more experiences,
0:05:56 more relevance. And I’m still on this fucking hamster wheel. And it’s the reason why I’m here.
0:06:01 Speaking to you right now, is that fair? Is that fair? Anyways, let me stay up to fine, you know.
0:06:09 But if I had been a young man and had access to porn, I’m not sure any of that would have happened.
0:06:14 And why is that? No joke. Part of the reason I used to go on campus and probably the only reason
0:06:19 I got a 2.27 GPA from UCLA and not a 1.87, which one, I wouldn’t have graduated. I wouldn’t have
0:06:23 gotten a job at Morgan Stanley. I wouldn’t have gotten into a high school of business, wouldn’t
0:06:29 have met my co-founder or a profit, wouldn’t have started businesses, and 30 years later, 35,
0:06:36 be at the fineena. And that is because I would go on campus and go to class because I was hoping
0:06:41 deep down, or something in the back of my mind, was that I was going to meet a stranger. I’m going
0:06:45 to establish a rapport with her and at some point have sex with her. That was very motivating for me.
0:06:54 And that sounds crass, but I don’t think there’s anything wrong with wanting to mate. And what I
0:07:02 tell young men is the following. I tell them, like, I can consume porn, but I’ve tried to, for the last
0:07:07 10 or 15 years when porn came on the scene, and I think it’s really good advice, especially for
0:07:15 young men, try and modulate your use. Because some of that desire, some of that wanting to meet people
0:07:22 such that you can make your own bad porn is key. You don’t want to extinguish those flames of desire,
0:07:26 because those flames of desire can actually result in good things. They want you, they make you want
0:07:30 to be more successful. They make you want to be in better shape. They make you want to develop a
0:07:35 wrap. They make you want to figure out a way to make someone else laugh. They make you want to
0:07:41 have a plan such that you’re more attractive, such that you might in fact be able to get out there
0:07:46 and establish your own romantic relationships. Anyways, what’s the, what’s the bottom line?
0:07:52 And the advice I would give to anybody, but especially young men, look, most people consume
0:07:58 porn. Is that true? Most men, I think, consume porn. I get it. But try and modulate your use
0:08:04 and try and figure out a way to develop the mojo, the desire, and the skills that you can get out
0:08:10 there and start making your own bad porn. So with that, here’s our conversation with Dr. Anna Lemke.
0:08:20 Dr. Lemke, what is this podcast behind you? I am physically sitting in my office here at
0:08:25 Stanford University. This is where I treat patients and do my work.
0:08:30 Sounds good. So let’s bust right into it. In your bestselling book, “Dopamine Nation,”
0:08:37 published back in 2021, you argued that constant access to stimulation is rewiring our brains.
0:08:43 Four years later, has anything changed or any additional observations between then and now?
0:08:49 I would say that the four years that have elapsed have really, unfortunately,
0:08:55 just seen an acceleration in this problem. I guess the good news is that people are
0:09:00 talking about it more, more aware of it. I think the groundswell really started with parents
0:09:07 concerned about their kids, but I think in general, the average person is now
0:09:13 more aware of and concerned about their consumption of digital media.
0:09:18 Something that I’m especially concerned about is the father of a 14 and a 17-year-old,
0:09:23 especially with a 14-year-old. And my colleague, Jonathan, I talk a lot about this, is that
0:09:29 the rewiring is especially, or I guess the more appropriate term would be the wiring of the brain
0:09:32 as children are going through puberty, that that can be especially damaging. Are we
0:09:38 about to flush into the economy or society millions of essentially dopa addicts that,
0:09:41 if they don’t find it on their screen, they’re going to find it elsewhere?
0:09:47 Yeah, it’s a great question. I think it’s important to emphasize that we are constantly rewiring our
0:09:54 brains, wiring just really being a metaphor for neurons and the plasticity of neurons and the
0:10:00 way that we’re constantly making new connections between neurons. Every single experience that
0:10:09 we have rewires our brain in some way. So the fact that we’re spending enormous amounts of time
0:10:16 online by the latest report, I think it was Pew Surveys came out and said that about 50%
0:10:21 of teenagers now report being continuously online during the waking hours. Of course,
0:10:28 that is rewiring our brain. The question is, to what end? Because we have to adapt to any
0:10:32 environment. We’re always rewiring our brains, but are we now rewiring our brains in a way
0:10:38 that is ultimately not good for us as individuals, not good for societies, not good for humanity?
0:10:45 I would say, and I think I’m a little bit more measured than Jonathan Hyde about this,
0:10:50 although I totally respect him in his work, I would say, yes, there is a lot to be concerned
0:10:58 about here, but that I’m ultimately optimistic that we will both self and other regulate. What
0:11:02 do I mean by that? I’m already seeing people who are beginning to say, you know what,
0:11:08 this isn’t good for me or this isn’t good for my family, even teenagers themselves forming these
0:11:12 groups and saying, let’s get off social media together. Let’s try to do things that we can do
0:11:19 in real life with each other. Other regulate because it can’t just be left up to the individual.
0:11:28 This is far too powerful a transformation to just say, well, it’s up to you to figure out
0:11:32 how to moderate your consumption of digital media. We have to get smartphones out of schools,
0:11:38 bell to bell. We have to hold the companies accountable. We have to legislate, particularly
0:11:44 to protect kids. Talk about the different types of addiction. There’s obviously addiction to
0:11:49 the screen, then there’s drugs, there’s alcohol, there’s pornography, there’s gaming. Is there
0:11:55 any way to sort of stack rank these addictions? And I was always told, I’m pretty open to my
0:11:59 podcast. I love marijuana. I loved it in college. I took kind of a 20-year break because I was
0:12:04 working my ass off and I started using it again. And I enjoy it. And I actually think it’s
0:12:10 additive to my life. But I remember people was telling me that it was a gateway drug to more
0:12:16 serious addictions. If you were to sort of stack rank different types of addictions in terms of
0:12:23 what is the most dangerous or what perhaps is a gateway to other things, any thoughts about sort
0:12:29 of the hierarchy or the waterfall of different types of addiction? Great question. I have become
0:12:36 pretty much convinced over the course of my career that it depends on the person and their
0:12:43 unique wiring and their drug of choice. For one given individual traditional drugs like alcohol,
0:12:52 cannabis, opioids, nicotine may not hold much appeal, but social media may indeed be the drug
0:12:58 that overpowers them and leads to a very serious and devastating addiction. Furthermore,
0:13:06 people are variably vulnerable to addiction period. Some people are much more vulnerable
0:13:10 than others and can get addicted to a lot of different substances and behaviors.
0:13:15 Other people getting addicted is something that probably won’t happen to them to a
0:13:20 significant degree. And again, the uniqueness of the wiring, although I have argued that we’re
0:13:25 all more vulnerable to addiction now than before because of the drugification of our environment,
0:13:30 I think we also have to take into consideration that when we’re thinking broadly about danger,
0:13:36 it’s not just the addictiveness of the drug. Nicotine is very addictive for many people,
0:13:44 but also the lethality of the drug. Opioids is something that can kill even when the dose is
0:13:52 just a little bit beyond what the dose is for the desired effect. That’s not true in the short term
0:14:00 for nicotine or cannabis, which can do significant harm in people who are addicted and use heavily,
0:14:08 but it usually takes a long time, many, many years of exposure. In your case, somebody who
0:14:13 loves marijuana, who gave it up for a period of time is now using it and just basically finds it
0:14:21 enjoyable. Great. It’s nice if that can be an enjoyable part of a person’s life and toxicants
0:14:26 in various forms have been around since the beginning of time. The one thing that I would
0:14:32 caution about always is just that we’re not always the best self-observers around whether or not
0:14:43 our enjoyment is really leading to long-term enjoyment or is interfering in ways that we
0:14:53 can’t see just because these drugs tend to interfere with our insight in terms of what they’re doing
0:14:59 to us. Often, they can be causing harm or we can be getting addicted and really not see it.
0:15:05 I’ve observed something and I’d love you to get your thoughts on it. I go to a lot of conferences
0:15:09 where there’s a lot of young, successful people, whether it’s South by Southwest or I go to this
0:15:16 event called Summit. I’ve noticed over the last 20 years that young people are not drinking,
0:15:23 but it’s not as if they’ve gone healthy or healthy era. The aspirational set likes to
0:15:29 think they’ve discovered a new technology and that they’re innovators and now they’re all doing
0:15:38 ketamine, not all, a lot of them have substituted or traded out alcohol for ketamine, ecstasy/moli,
0:15:46 2C, which I guess is a mix of ketamine and molly, even to the point where they would roam around
0:15:51 these conferences with their own concoction, using eyedroppers and different means of,
0:15:57 I mean, it’s just staggering to me. I went to this thing called Summit at Sea and it was on a
0:16:01 cruise ship and I went up in order to drink and the bartender said, Jesus, someone’s actually
0:16:09 ordering a drink. This is amongst a crew doctor of wealthy young people who would generally be
0:16:15 aligning at the bar and the one I mixed was mushroom chocolates and I imagine there’s
0:16:21 a lot of edibles in there too. I’ve just seen an enormous and if you look at, it’s having such
0:16:27 weird knock-on effects and London 40% of nightclubs have closed since pre-pandemic because kids aren’t
0:16:32 drinking and some of that is they don’t have the money anymore, but they’ve swapped out,
0:16:38 they’re under the impression that it’s healthier or less bad for you and they’d rather do
0:16:44 mushroom chocolates and have one drink or molly and they see alcohol as old technology.
0:16:51 I’m curious if you see, this is just anecdotal evidence or if you see real evidence of this
0:16:56 and what your thoughts are around addiction and what it means for society when we’re no longer
0:17:02 two martini lunches, we’re maybe doing a little bit of ketamine and trying to get on with our day.
0:17:09 What do you see going on here? Yeah, well, I mean, I’m really torn because on one level,
0:17:15 as an addiction psychiatrist, I’m thrilled that people are taking more seriously the harms of
0:17:23 alcohol, which we’ve known for many thousands of years. Of course, again, alcohol in moderation,
0:17:28 the healthiest people being those who drink no more than one to two standard drinks per week
0:17:34 and the threshold being per week. Right, per week. If we’re taking the healthiest people on the
0:17:42 planet… Oh, doctor. I was almost entirely sure you were going to say per day, but okay, maybe.
0:17:48 I know, I know. But let me qualify that. Let me qualify that. Okay. So that’s a J-shaped curve
0:17:53 that shows that people who drink one to two standard drinks per week are the healthiest,
0:17:57 but it’s probably because there are confounds there. Those are people who do a lot of things
0:18:02 in moderation. They eat in moderation. They exercise in moderation. They’re even healthier
0:18:08 than people who don’t drink at all, but that’s not because alcohol itself is good for us. It’s
0:18:12 because in that non-drinking cohort, you get people who are what we call sick quitters who used to
0:18:18 drink heavily and now are on the liver transplant list. But what we do know is that beyond two drinks
0:18:24 per week, and again, these are large epidemiologic catchment studies, one given individual is going
0:18:31 to have their own trajectory, but beyond two drinks a week, you get to a threshold in women
0:18:36 where more than seven drinks per week and men, men more than 14 drinks per week, where you start to
0:18:43 see a significant increase in all cause morbidity and mortality, whether it’s risk of cancer, risk
0:18:51 of accidental death or trauma, risk of pancreatitis, liver disease, dementia, what have you. So that’s
0:18:56 why we generally recommend that men have no more than 14 standard drinks per week and no more than
0:19:01 four on a given occasion when women no more than seven per week and no more than three on a given
0:19:07 occasion. But in general, through most of my career, it’s been an uphill battle trying to convince
0:19:14 people that alcohol is not good for them when consumed in excess, excess being as I just defined
0:19:19 it with the 14 or four. There’s been a huge sea change in the last five years where all of a sudden
0:19:26 people seem much more aware of the dangers of alcohol, much less inclined to consume it recreationally
0:19:32 because they’re concerned with the dangers. This maps perfectly with what we know about perceived
0:19:38 dangers in use. When people perceive that a substance is dangerous, they’re less likely to use it,
0:19:43 less likely to use it in excess, less likely to get addicted. The huge shift along with that,
0:19:50 I think, is twofold. One, what you’ve already identified, the incredible surgeons of designer
0:19:54 drugs in all their various forms, including plant medicines, hallucinogens, psychedelics,
0:20:02 where people really misperceive the dangers, think they’re much safer than they actually are,
0:20:07 and also have become acquainted with having some kind of actualization experience or spiritual
0:20:12 growth experience. So you’ve got the combination of people thinking they’re not dangerous. Why?
0:20:16 Because they’ve been heavily promoted is not dangerous, including the studies that promote
0:20:21 their use, for example, the use of psilocybin as a treatment for depression. Those studies
0:20:27 systematically ignore harms, don’t document harms, and the lay press has picked that up,
0:20:33 that has legs, and now people think, oh, you know, hallucinogens, psychedelics, they’re not addictive,
0:20:38 they’re not harmful, and I might have a spiritual awakening. So that’s what’s happening there.
0:20:43 I think the other piece of it too that can’t be ignored is that we are narcotizing ourselves
0:20:48 with digital media. So where we might go drink and get together with others, which in some sense,
0:20:53 at least it was more social, you know, now, you know, I can speak for myself, I’m like in my
0:20:59 bedroom watching one YouTube video after another, and it feels very pleasant. And yet I know it’s
0:21:11 not good for me. We’ll be right back. Suppose in the future there’s an artificial intelligence.
0:21:16 I’ve been asking some very smart people a question that’s been on a lot of our minds.
0:21:23 Should we be worried about artificial intelligence? But the answers I got from the greatest minds in
0:21:30 AI surprised me. One guy told a parable of an AI that could cause an apocalypse.
0:21:35 Let’s give this super intelligent AI a simple goal. Produce paper clips.
0:21:44 Be a paper clip? Another woman cast AI as an octopus. We posit this octopus to be mischievous
0:21:48 as well. And yet another story sounded like it was out of the Bible.
0:21:54 She seems likely to drown. What should you do? Imagining AI as a savior. Like a god.
0:22:02 And all of these fantastical tales from the greatest minds in AI made me wonder maybe even
0:22:09 these people don’t know what to think. I’m Julia Longoria, Good Robot, a series about AI
0:22:14 coming March 12th on Unexplainable, wherever you get podcasts.
0:22:21 Support for the show comes from Betterment. When investing your money starts to feel like a
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0:22:45 your money to work optimizing day after day and again and again. So go ahead, take your time to
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0:23:02 .com. Investing involves risk, performance not guaranteed.
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0:23:12 the right audience. And sometimes it feels like the only solution is posting everywhere,
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0:23:56 can try it yourself. Just go to LinkedIn.com/Scott. That’s LinkedIn.com/Scott. Terms and conditions
0:24:09 apply only on LinkedIn ads. So, and I don’t know if the producer warned you, but basically I use
0:24:14 these podcasts and I guess as a vehicle to talk about me. You know what? Go for it. I love it.
0:24:19 It’s so much more interesting for me because I get to like, you know, see a real human being.
0:24:23 And I have one of the top domain experts in the world, so. On yourself or on something?
0:24:29 I’m teasing you. On addictions. And I’m fascinated with addictions. And I want to talk about a
0:24:33 couple of addictions I think I have and you talk about whether they’re actually clinically
0:24:37 diagnosed addictions and what to do about them. And then I want to talk about the advice I give
0:24:41 to young men and what I’m getting right and wrong because what I realize is I have a series of
0:24:45 principles that I lecture young men about and I don’t know. I think I’m right, but I want to know
0:24:51 what I don’t know. So the first is I believe that everyone has a certain amount of addictions.
0:24:57 That’s not true. Some more than others. But I think almost everybody has some level of something
0:25:02 they do that is probably, if they did less, it would probably be better for them across their
0:25:07 life, whether it’s addictions to shopping, the affirmation, whatever it might be. And I’m addicted
0:25:12 to the affirmation of strangers. I care too much about what other people who I don’t know will
0:25:18 never know think. And sometimes it gets in the way of my relationships with people who I do,
0:25:23 I should care about. Someone will say something mean about me or insult my work on a social media
0:25:29 platform and it inhibits my ability to be close to my loved ones that weekend. I see that as an
0:25:33 addiction, an addiction to the affirmation of others and strangers. And I think that might be
0:25:37 something that plagues quite frankly a lot of successful people or insecure people.
0:25:44 And then I would also argue I have an addiction to money that I’m very blessed and I got kind of
0:25:51 enough money to live well or be economically secure. And I still almost every waking hour
0:25:56 spent a decent amount of that time thinking about how to get more money, even when I should probably
0:26:00 and I talk myself into believing it’s for me and my family, but it’s really just an addiction.
0:26:05 I’ve spent so long trying to dig out of economic insecurity that I’ve become addicted to more
0:26:10 specifically more money. So addiction to the affirmation of others, addiction to money. Are
0:26:14 those clinically diagnosed addictions? And how should I be thinking about them?
0:26:21 Wow, those are really good ones that I don’t get asked about very often. So thank you for your
0:26:27 honest self-disclosure. Let me go back a little bit to your first comment, this idea that everybody
0:26:33 has something that they do more of than they wish they did. I mean, and that’s been true since the
0:26:39 beginning of time. We know going all the way back to what Aristotle called wide-eyed incontinence.
0:26:45 Incontinence is actually something that we, a term we use in medicine to talk about when people
0:26:50 can’t hold their bladder. But this kind of where Aristotle talked about wide-eyed incontinence,
0:26:56 I see the thing that I am doing. I have wide eyes when I’m seeing it. I want to stop doing
0:27:02 as much of it as I’m doing, and yet I am unable to. And so I agree with you that that is true for
0:27:11 all of us in varying degrees. And it’s because of the way we are wired over many, many, many
0:27:17 thousands of years of evolution to reflexively approach pleasure and avoid pain, because that
0:27:22 is what ensured our survival in a world of scarcity and ever-present danger, which is the
0:27:28 world that we lived in for most of human existence. As civilization has progressed, we have managed
0:27:34 to use our big brains to apply technology. It’s not right. Now we’ve drugified everything. We’ve
0:27:41 made it more potently rewarding, more easily accessible, more abundant, more novel. And so now
0:27:46 we’re all struggling with this problem of compulsive overconsumption, which is really
0:27:54 making us unhappy. This idea of the affirmation of strangers, so it’s very clear that we are also
0:28:02 wired over evolution to want to connect with people. Being in a tribe is what ensures that we
0:28:08 will find mates, stewards, scarce resources, protect ourselves against predators. And that
0:28:13 wiring works through our dopamine reward pathway. We know that oxytocin, the love hormone, binds
0:28:18 to dopamine-releasing neurons in the reward circuitry to release dopamine, which is our
0:28:22 pleasure reward neurotransmitter. The more that dopamine is released and the faster that it’s
0:28:31 released, the better it feels. And this is healthy and normal and wonderful until you have drugified
0:28:36 human connection, which is exactly what the internet and social media and digital media has done.
0:28:42 So you’re somebody who is relational. You care about what other people think of you. We all do,
0:28:49 by the way, to varying degrees. But most of us, if not all of us, care what other people think
0:28:56 that’s so deeply ingrained. But now you live in a world where you can have instant affirmation
0:29:04 or its opposite at scale, hundreds to thousands to millions of people, right,
0:29:11 quantified with likes and shares and on and on. And now you really have a very potent drug,
0:29:16 which, when it’s going well, is incredibly reinforcing, much more so than some nice compliment
0:29:22 my husband might give me. Like, that’s not as exciting as my book is number one on Amazon,
0:29:27 right, with a whole bunch of reviews and people telling me that I’m great. And it’s very easy
0:29:34 to get caught up in that. So, yes, I think we can get addicted to the affirmation of strangers. I
0:29:40 think that the internet and social media has become the drugification of social affirmation,
0:29:46 making us all more vulnerable to that problem. And my intervention for that problem would be
0:29:52 the same as for people addicted to drugs and alcohol, which would be to abstain from social
0:29:58 affirmation venues, especially when you’re dealing with them at scale. So, try to avoid
0:30:04 those types of situations where you would be exposed to, like, all of the love. Because,
0:30:10 ultimately, what happens with that huge surge of dopamine is that our brain compensates by
0:30:16 downregulating dopamine transmission, not just to tonic baseline levels, but actually below baseline.
0:30:21 We go into a dopamine deficit state. That is the addicted brain. Now we need more of our drug and
0:30:27 more potent forms, not to get high and feel good, but just to sort of level our balance, go back
0:30:32 to baseline and feel normal. And we’re in a constant state of craving. Plus, we’re experiencing
0:30:36 the universal symptoms of withdrawal from any addictive substance, which are anxiety, irritability,
0:30:42 insomnia, dysphoria, and craving. Getting more of our drug temporarily relieves that, but it doesn’t
0:30:48 last very long and actually makes the problem worse. And in terms of money, there’s so much
0:30:54 evidence that monetary gain lights up the same reward pathway as drugs and alcohol. It’s why
0:31:02 we’re seeing a huge, huge increase in online pathological gambling, sports betting has been
0:31:09 made legal in many states and the nation. And with it, like, a 300 to 500% increase in calls to
0:31:15 hotline pathological gambling centers, because people are losing everything in the face of,
0:31:22 you know, their parlays having to do with whether or not the referee is going to touch his hat five
0:31:27 times, you know, during the game. So, yeah, I mean, this is sort of human nature,
0:31:35 like writ large, because we live in an ecosystem that has taken all of these things that are in
0:31:40 some fundamental way, healthy and good for us, and something that our brains need to be doing,
0:31:45 and turned it into a drug. Yes, prior to that, I believe that one of,
0:31:50 I’m constantly saying something as a crisis, I would use the word crisis, but I do think we
0:31:57 have a crisis of loneliness. Do you think you can be addicted to loneliness, or that we just
0:32:02 fill in the dope that we used to get from being social, as you reference, getting that hit with
0:32:10 a low cost, low entry, low risk activity, like YouTube, or what have you, can you get it?
0:32:19 I have to force myself. It takes me almost as much discipline to get out and be around other people.
0:32:27 As it is to drink less. I have become, as I’ve gotten older, addicted to being alone,
0:32:34 and I just find it easier comforting whatever happens, and I know it’s bad for me.
0:32:40 Could you say a certain level of deciding to be alone, maybe more than it’s healthy,
0:32:46 could that be classified as an addiction? Drugs in all their forms are the great human
0:32:55 replacement. Addiction is a disease of loneliness. Even if we have a lot of great people in our
0:33:03 lives, if we get addicted, we will isolate, and we will use our drug to replace that human connection.
0:33:09 I say that because we sometimes talk about loneliness as the cause of addiction,
0:33:16 but more often than not, what I see is that the addiction causes the loneliness. That because we
0:33:24 are able to use this drug, or this device, or this behavior to meet our physical, emotional,
0:33:31 sexual needs, we are no longer seeking out other people. It’s an enormous problem,
0:33:37 because not only are more people in the United States actually physically living alone than ever
0:33:44 before, but more people than ever before are endorsing loneliness. This is a huge problem,
0:33:50 and again, the antidote is to do the thing that’s painful and difficult in the short term,
0:33:56 because in the long term, it will make us feel better, and it will make our lives better.
0:34:04 How have you seen the patients and the research you see come through your office and across your
0:34:10 desk? Which addictions or types of addictions have you seen increase and decrease?
0:34:19 In terms of our patient population, the most common addictions for years have been the usual
0:34:26 suspects, alcohol, nicotine, cannabis, and then starting the early 2000s opioids, prescription
0:34:34 opioids, segueing to heroin and illicit fentanyl. Starting in the early 2000s, we saw the very first
0:34:40 signal of typically middle-aged men coming in with sex pornography and compulsive masturbation
0:34:46 addiction and almost universally endorsing that it was the advent of the internet and then explicitly
0:34:53 the mobile devices, the smartphones that led them from moderate, manageable pornography use to
0:34:59 immoderate, unmanageable addictive use and destroying lives, like losing their families,
0:35:07 their jobs, engaging in illegal activity. Since that time, we’ve just seen an increase in escalation
0:35:13 in people coming, presenting with digital media addictions, video games, social media, online
0:35:19 gambling, online shopping, the internet more broadly a kind of diffuse addiction to the internet.
0:35:26 That’s what we’re really seeing increasing. We’re here in Northern California, so cannabis is huge.
0:35:31 We’re also seeing a lot of, as we talked about, designer drugs, psychedelics, hallucinogens.
0:35:38 Nobody uses, they used to call, let’s say 25, 30 years ago, they had this term white
0:35:44 glove, alcoholics. These were folks who were just addicted to alcohol and not anything else.
0:35:53 We never see that anymore. Everybody’s using a whole bunch of stuff. It’s a real polypharmacy
0:35:59 festival. I coach and work with a lot of young people, specifically I think a lot about young men,
0:36:06 and the addiction I see emerging that I don’t think is getting enough attention, that just
0:36:12 feels like a ticking time bomb to me, is online gambling. The reason I think of it as being so
0:36:20 dangerous is my mother was a docent at the Bellagio in Vegas. She used to come home with
0:36:25 all these facts about gambling addiction, and she told me, and you can confirm or deny this,
0:36:32 that it has the highest suicide rate because you can get in so deep. If I develop an addiction to
0:36:37 meth or alcohol, it generally becomes pretty visible to the people around me, and they intervene
0:36:45 and try to do something. I can get so deep with gambling, and nobody knows. Then I get in so
0:36:51 deep. I’ve spent my kids college fun, mortgage the house. My spouse doesn’t know what I’ve done.
0:36:59 I see no way out, and I decide to end it. I’ve just seen these stats that 50% of college males
0:37:05 bet on the Super Bowl. Occasionally, I’m in a scenario where I’m with a bunch of young men,
0:37:09 and they’re all on their phones, and I think, “Oh, that’s natural people. I know kids are on the
0:37:14 phones.” They’re all gambling on the game they’re watching, and they’re not gambling. They’re not
0:37:22 doing 100 bucks. Liverpool will beat Arsenal. They’re gambling every seven minutes. The ball’s
0:37:29 going to turn over. What you were saying about the ref, and I know these companies and the people
0:37:33 architecting these algorithms, they will figure out who’s going to lose their money and encourage
0:37:38 them to bet more, and the ones who actually know what they’re doing, they will block out of the
0:37:45 platform. It’s a guaranteed loss of income. I like to gamble. I think it’s fun. I go to Vegas.
0:37:51 I gamble, but I assume it’s consumption. I assume I’m going to lose it all. It strikes me that we
0:38:00 might, and tell me if I’m being just hyperbolic or inflammatory, or exaggerating, or just
0:38:07 warring too much here, that we’re going to have hundreds of thousands of young men, and my sense
0:38:11 as young men, and I like to validate and allify this, are much more prone to gambling addiction
0:38:19 than women, who enter the world with massive financial hangovers and shame because of the
0:38:28 constant presence of gambling apps, your thoughts? Yeah. It’s funny that you, I thought for sure you
0:38:36 were going to say online pornography, because I would probably put, in terms of risks to men
0:38:42 living in the world today, I would probably put that above online gambling, but I would make online
0:38:49 gambling a close second. It’s very hard to get actual data on this, but this is sort of based on
0:38:55 my clinical impression of what I’m seeing. Of course, I’m seeing treatment seekers, but
0:39:03 yeah, this is an enormous problem. I always like to start by emphasizing the vast majority of people
0:39:09 who gamble will not get addicted to gambling, and that’s true for any drug, right? Most people
0:39:16 will be able to moderate their use, but as with drugs and alcohol, about 10 to 20% of folks who
0:39:22 consume will develop an addiction. An addiction is a brain disease, a very serious and potentially
0:39:28 life-threatening one, and until you’ve either experienced it yourself or seen it in somebody
0:39:33 you care about deeply, it’s really hard to imagine how people could get to a place where
0:39:40 they would sacrifice everything in pursuit of their drug, but that’s exactly what happens.
0:39:47 What is the vulnerability there? What is the difference? The risks I usually classify into
0:39:52 nature, nurture, and neighborhood. Some people are inherently more vulnerable than others,
0:39:57 but as we’ve talked about, drug of choice matters. If you meet your drug of choice and it’s gambling,
0:40:03 you may never get addicted to alcohol, but gambling may just be the end of you. Co-occurring
0:40:10 psychiatric disorders pays people at risk because of a kind of a self-medication myth and cycle.
0:40:15 We know that trauma contributes to the risk of addiction. That’s the nurture part of it,
0:40:20 but also neighborhood is really key, and this is, again, the ecosystem that we live in. The easier
0:40:26 it is to get your drug of choice, the more of it you’ll use, the more you’ll change your brain,
0:40:29 and the more likely you will be to develop a very serious addiction.
0:40:42 Gambling is everywhere. There’s enough data to verify your impression that it’s more men than
0:40:47 women, although women also struggle with it. The same is true for online pornography. More men
0:40:53 than women develop an addiction to that, although women do develop pornography and sex addictions.
0:41:00 There are some addictions where women are more vulnerable than men like online shopping
0:41:06 and social media, but in terms of the gambling and pornography, definitely men are more vulnerable,
0:41:10 and I absolutely agree with you that this is a huge and largely unseen problem,
0:41:19 complicated, as you say, by the shame issue, where for gambling addiction, there’s still so much about
0:41:28 in our culture about being a man who becomes wealthy and successful as our modern-day hero,
0:41:34 that if you’re somebody who’s not done that or, God forbid, gotten into financial trouble,
0:41:40 very, very hard to come forward and ask for help. Frankly, the same is true with sex and
0:41:48 pornography addiction. We have this prevailing cultural, I believe, false notion that all men
0:41:55 are sexual predators. To come forward, you can only imagine the shame of somebody having to
0:41:59 come forward and say, “I’m addicted to sex or I’m addicted to pornography,” or, “I watch these types
0:42:06 of pornographic images and they’re stimulating for me.” Very shameful, very hard. I’ve had patients
0:42:13 come in and say they had a problem with some drug, which wasn’t even their problem. It was
0:42:19 pornography and it took them four visits to be able to admit it. Huge, huge problem here. Again,
0:42:27 access, ease of access, quantity, all the touch of our fingertips, which just makes it very,
0:42:34 very difficult for us as humans who are reflexively wired to approach pleasure and avoid pain,
0:42:38 to withstand the lure of these incredibly potent drugs.
0:42:43 There are professors and academics such as yourself looking at gaming.
0:42:48 I found it really difficult to find anybody with deep domain expertise or peer-reviewed
0:42:53 research around porn. My assumption is that professors don’t want to be known as Professor
0:42:57 porn, that there’s actually shame in the academic community. You don’t want to be that guy or gal.
0:43:03 It’s like, “Well, why did you decide to do that, Professor?” It’s the second largest category,
0:43:10 I think, on the internet and relative to the size of it, there’s a ridiculous scant amount or dirt
0:43:15 or research around it. I had thought that, or some of the stuff I’ve read is that it’s a small
0:43:21 population consuming a disproportionate amount of porn, that most men, young men, and young women
0:43:29 are able to modulate it. My fear around it has always been that it’s just being very transparent.
0:43:34 One of the reasons I went on campus every day at UCLA was one, because I knew I was supposed to go
0:43:40 to class, but two, the prospect that I might meet someone who, over the medium or long term,
0:43:44 would decide to have sex with me. You sound like my son.
0:43:50 I sound like most sons in their head, and I think I just articulate it.
0:43:57 If I’d had porn available at home, I’m pretty certain I wouldn’t have been on campus
0:44:00 five days a week. I might have gone to four or three or two, because it just might have been…
0:44:07 I mean, the reality is, I wanted sex so badly, and my hormones were raging so much that I was
0:44:12 willing to take social risk and go out and try and meet people. By the way, I think that’s really
0:44:19 healthy to think, “I want to take these risks. I want to meet people in hopes that I can have a
0:44:24 coffee, invite to a party, establish a relationship, and at some point along the way, maybe have
0:44:28 those types of physical encounters.” I think that is really, really healthy,
0:44:34 and I worry that, and curious to get your take, that it’s not the hardcore addicts that are
0:44:41 screwing up America around this stuff. It’s that it just decreases across an enormous population
0:44:49 of young men, their willingness to establish connections with others, that we’re evolving
0:44:57 it. We’re maturing a new species of asexual, asocial males that never get categorized or
0:45:03 clinically diagnosed as addicts, but are just alone their whole lives and never develop these
0:45:09 skills. Is there a low-level form of, I don’t even call it addiction, but avoidance or replacement
0:45:15 theory that could be even more damaging than what we think of as traditionally diagnosed addiction?
0:45:23 Absolutely, and there are data to support this. For all our liberated sexual moors,
0:45:31 young people are having less sex today than ever before. Many young men will report that they
0:45:38 feel like the social landscape out there when it comes to dating and having sex is so uncertain
0:45:45 and such a landmine that they just end up staying home, watching pornography and masturbating,
0:45:50 and for folks who are vulnerable to that as their drug of choice, it can evolve to the point where
0:45:57 they literally cannot stop. Like with any drug, they need more potent forms over time. Pornography
0:46:05 becomes chat rooms, chat rooms become meeting in person, prostitutes, child pornography. I mean,
0:46:15 this is a huge issue right now. By the way, I think your point here about it being so widespread
0:46:22 that we can hardly even call it, it’s like an endemic disease. It’s not even a rare disease.
0:46:31 I have had in the last little bit of, like the last month, two mothers call me who are
0:46:39 in desperation because their sons have been identified as viewers of child pornography.
0:46:47 Now, these are teenage boys who are watching teenage girls and who now are facing potential
0:46:58 felony. I just think that the whole system is not set up for the degree to which this behavior has
0:47:04 become so widespread, so normative. I mean, we can’t be convicting all of these young men of
0:47:13 felonies and I’m not by any means endorsing child pornography or teen pornography. My personal
0:47:22 opinion is that none of it’s good for so many reasons. But the issue is we have a court system
0:47:29 who is now looking to convict an 18-year-old boy for viewing pornography of a 17-year-old girl
0:47:35 and facing like being a lifetime sex man. Our legal system has clearly not caught up
0:47:41 with what is happening. The corporations that make and profit from these media are not remotely
0:47:47 being held responsible for what’s going on. I mean, this is really endemic proportion problems.
0:47:57 I talk about the smartphone as our masturbation machines and I mean that in every sense of the
0:48:04 word, that’s what they are. We’re using the internet and these devices to meet all of these needs
0:48:11 that used to require other people and part of what connects people together is our interdependency,
0:48:17 our mutual need. If we didn’t need other people, we wouldn’t bother to do the work to go interact
0:48:22 with them because it’s a heck of a lot of work and it’s complicated and it’s ambiguous and it’s
0:48:29 painful because of all the ways in which we’re all so complicated. So yeah, this is a huge
0:48:37 problem. We’re creating a generation of mole people as in mole the animals who never go out
0:48:42 and never leave their little hidey holes. Super scary. We’ll be right back.
0:48:53 We’re taking Vox Media podcasts on the road and heading back to Austin for the South by Southwest
0:49:00 Festival March 8th to the 10th. What a thrill. We’ll be doing special live episodes of hit shows
0:49:05 including Pivot. That’s right. That dog’s going to the great state of Texas. Where should we begin?
0:49:12 With Esther Perrell, a Touch More with Sue Bird and Megan Rapinoe, not just football with Cam Hayward
0:49:18 and more presented by Smartsheet. The Vox Media podcast stage at South by Southwest is open to
0:49:23 all South by Southwest badge holders. We hope to see you at the Austin Convention Center soon.
0:49:31 Visit voxmedia.com/sxsw to learn more. That’s voxmedia.com/sxsw.
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0:50:47 offer. Go to 1-800-FLOWERS.com/PropG. That’s 1-800-FLOWERS.com/PropG. We’re taking Vox Media
0:50:51 podcasts on the road and heading back to Austin for the South by Southwest Festival March 8th
0:50:58 through the 10th. What a thrill, chicken fajitas, queso, strawberry margarita, extra shot of tequila.
0:51:03 There you’ll be able to see special live episodes of hit shows including our show Pivot. Where should
0:51:09 we begin with Esther Perrell? A Touch More with Sue Bird and Megan Rapinoe. Not just football with
0:51:16 Cam Hayward. And more presented by Smartsheet. The Vox Media podcast stage at South by Southwest
0:51:21 is open to all South by Southwest badge holders. We hope to see you at the Austin Convention Center
0:51:27 soon. I’m not joking. I love South by Southwest. The people are a ton of fun. It’s a great time.
0:51:37 If you do come come up and say hi, visit voxmedia.com/sxsw to learn more. That’s voxmedia.com/sxsw.
0:51:54 We’re back with more from Dr. Anna Lemke. I want to move to solutions and I’m sure you get calls
0:52:00 from government officials in DC and Sacramento or ask for your advice on the stuff. I think most of
0:52:07 this, if I could think of one thing to try and set a context that would reduce addiction, it would
0:52:12 be third spaces. And that is trying it as many young people as often as possible in the company of
0:52:18 other young people and in the company of potential mentors, friends, and mates. I was in Israel after
0:52:26 October 7th at the Nova Music Festival site or memorial and I met with a battalion of IDF
0:52:34 soldiers and they were these young extraordinary fit 120 kids, 19 to 21 outdoors in the company of
0:52:40 each other. Many of them go on to start businesses together, lifelong friends. A lot of them meet
0:52:46 their spouses outdoors serving in the agency of something bigger than themselves. And I thought,
0:52:50 I just don’t think nearly as many of these young adults are going to end up addicts.
0:52:58 And I thought, how can we do this a million times in different ways, whether it’s
0:53:04 continuing education, softball league, church, nonprofit, like third spaces. If I could do one
0:53:09 thing, it would be third spaces. What is the one thing, your thoughts on that and what is the one
0:53:15 or two things you would want to do to set up a context of success and addiction avoidance?
0:53:22 Because we are creatures innately designed to approach pleasure and avoid pain,
0:53:31 we need to create spaces where we have access to healthy sources of pleasure and a sufficient
0:53:37 challenge to make that interesting enough for us that we creatures who need a certain degree of
0:53:45 friction find it interesting, and also spaces that limit our access to unhealthy sources of
0:53:51 pleasure, unhealthy dopamine, as in the instant pleasures of the various intoxicants we’ve been
0:53:58 talking about. So I love the idea of third spaces, but it sounds a little rarefied,
0:54:04 like it would be for the elite and the wealthy. We have the potential to create those third spaces
0:54:09 in the public school system where kids spend the vast majority of their lived hours.
0:54:10 So after school programs?
0:54:15 Not even after school, during school. How can we do that? Get smartphones out of schools, bell
0:54:25 to bell, create, give hands on, bring back. What happened to, I mean, I didn’t like auto shop,
0:54:34 but at least we had it. Let’s have more art, more hands-on stuff. Let’s have writing classes
0:54:39 where they’re not allowed to use chat DTP and they get real, not to say that we should never
0:54:45 use those tools, but everything’s gone online in the schools. It’s all digitized. We’re learning
0:54:52 everything by watching somebody else do something. Kids need to do, and schools are the place,
0:54:59 the default place to make that happen, which means getting the digital drugs out of their hands during
0:55:06 school time hours. I’m also a huge believer in age verification. We have to recognize that
0:55:13 digital media is a drug for the vulnerable. The vulnerable include a kid with a developing
0:55:17 brain. We cannot have five-year-olds on iPads for eight hours a day.
0:55:20 What do you think that number is? Is it 16? Is it 12? What is it?
0:55:29 I think it’s at minimum, at minimum 13, and even then, I think there has to be a lot more
0:55:35 in terms of guardrails. We really need real age verification, like the real deal,
0:55:39 where you have a third-party site, your register. I know there’s a lot of problems with that in
0:55:47 terms of people’s privacy, but I’m sorry, we make a lot of sacrifices to protect the vulnerable few
0:55:53 as we should do in our society. We already don’t let kids drive cars by firearms, go into
0:55:59 casinos in gamble, buy cigarettes, buy alcohol, buy drugs. Join the military. We age get a lot of
0:56:04 things. We recognize that kids have vulnerable grains, and that their frontal lobe isn’t fully
0:56:09 connected. If we just let them run amok, we would have many fewer kids on the planet,
0:56:14 and we’ve got to protect our kids. That’s what I think.
0:56:16 Do you have kids, doctor? I do.
0:56:22 What advice would you have? I find it difficult sometimes to discern between
0:56:30 normal adolescent behavior, which is abnormal, as far as I can tell, and when I should be worried,
0:56:37 when I should think, okay, he takes his phone into the bathroom to watch TikTok and pretends
0:56:44 he’s in the bathroom for 10, 20 minutes. Okay, is this 14-year-old behavior, or should I be
0:56:54 worried? As someone who’s been a parent, and what pieces of advice, I don’t know how old
0:57:01 your children are, but as it relates to addiction, are there any sort of unlocks or critical success
0:57:08 factors or red flags in your child’s behavior where you can help discern the difference between
0:57:14 what you call not necessarily behavior we shouldn’t correct, get out of the bathroom enough already,
0:57:19 but where you probably think, okay, this is getting serious and might require professional
0:57:26 intervention? Yeah, so there’s no blood test or brain scan and diagnosis addiction. We base
0:57:31 it on phenomenology on what’s called the DSM, the Diagnostic and Statistical Manual of Mental
0:57:36 Disorders, which briefly summarized as the foresees, control, compulsions, cravings, and
0:57:43 consequences, especially continued use despite consequences. The problem is that a lot of kids
0:57:50 use substances, engage in addictive behaviors, and don’t have obvious consequences, so it’s very
0:57:55 hard to tell at that age because they’re young, they’re resilient, and they’re good at hiding it.
0:58:01 So although you won’t find these criteria in the DSM, I think a warning sign to look for,
0:58:06 unless there are obvious signs of unraveling, but if you’ve got a kid who, you know, isn’t
0:58:13 obviously unraveling, but you’re kind of wondering, is look for lying and other anti-social behavior.
0:58:18 Again, you won’t find that in any psychiatric diagnostic manual, but I think those are very
0:58:25 important soft signs of something going wrong with the kid or in the family. Now, all people lie,
0:58:30 the average adult tells one to two lies per day. These tend to be small little lies about, you know,
0:58:36 hiding our own selfishness and foibles, and teenagers definitely lie. But if you get a kind
0:58:42 of a more significant systematic lying about where I’ve been, who I was with, what I was doing,
0:58:51 or even just kind of anti-social behavior, rudeness, hostility, rage, these are the things
0:58:56 that I think, you know, we should look for as potential warning signs for something going wrong
0:59:02 with our kid. Last question, Dr. You’ve been very generous with your time. Very curious to get your
0:59:09 thoughts and take on GLP-1 drugs. GLP-1 drugs are super exciting. I’m really glad they’re here.
0:59:15 They don’t work for everyone all the time because we’re all unique and we have these unique brains.
0:59:21 But the more tools we have to stop the kind of addiction chatter that happens for some people,
0:59:27 the better. As you know, GLP-1 agonists are FDA-approved to treat diabetes and obesity.
0:59:33 They modulate stomach emptying, slow down, you know, the gastric flow and make people feel more
0:59:38 full. But they also work on the brain’s reward pathway. They modulate dopamine release, our
0:59:43 reward neurotransmitter. And there is very active research now looking at their use broadly in
0:59:50 addictions for most alcohol addiction, but also there’s some preliminary evidence for benefit
0:59:55 with nicotine addiction with opioid use disorder, which is really interesting, as well as behavioral
1:00:01 addictions like gambling and sex. We are using them off-label occasionally in our clinic for
1:00:06 treatment refractory alcohol use disorder. This is folks who have tried everything for their
1:00:12 alcohol addiction and we’re getting some good traction in a few of our folks. Other folks
1:00:16 are trying it and don’t find it that helpful. So, you know, nothing is going to be like the
1:00:23 miracle drug. I don’t think GLP-1s will either, but they’re exciting new development and they
1:00:28 can be very effective for food addiction and potentially other addictions as well.
1:00:34 Dr. Anna Lemke is a professor of psychiatry at Stanford University School of Medicine.
1:00:39 She’s also the author of the bestselling book, Dopamine Nation, Finding Balance and the Age
1:00:44 of Indulgence. I really enjoy this conversation and you’re doing such important work and you
1:00:49 have such a nice vibe about you. You just reek of credibility and I can see why you’re
1:00:53 having such an impact because I find myself just hanging on every word because I get the sense
1:00:59 that you are really, I don’t know, a good actor trying to just call balls and strikes. Really
1:01:10 appreciate your good work and enjoy the conversation, Dr.
1:01:25 Osborne of Happiness. I am starting, I had a bit of a gap, but I’m starting to coach young men
1:01:31 again and actually had a kid come up to me last night. This guy is really super impressive in
1:01:38 the ad tech market, making real good money and kind of stalking me and asking me to be his mentor.
1:01:42 And finally I just said, “Dude, you don’t need my help.” And who I’m trying to focus on are quite
1:01:46 frankly young men who are struggling. And I’ve actually taken on a couple men my age who are
1:01:53 trying to reinvent themselves who are struggling, but I’m doing this exercise and it’s yielding
1:02:00 real benefits, especially with young men. And that is, I was just struck by the stat I read that
1:02:09 over half of men ages 18 to 24 have never asked a woman out in person. They’ll swipe right, right?
1:02:14 They’ll email somebody or whatever it might be or though who knows, like go on Craigslist and
1:02:22 get whatever, but there’s very, the majority of men 18 to 24 have not asked a woman out in person.
1:02:32 And that just rattled me and made me so upset and sad. When I think about 18 to 24 for me was
1:02:36 putting myself in an environment where I’d have a greater likelihood of being able to ask a woman
1:02:42 out. And I show me someone who can ask a woman out or handle the rejection or be successful.
1:02:46 I’m going to show you someone who’s good in a bar is good in a, is good in a boardroom. I think
1:02:52 it’s a key skill for young men. And so the exercise I’ve been doing and I talk a lot about this is
1:02:56 one, we’re going to get fit to start making a little bit of money, no matter what it is,
1:03:04 lift driver, task rabid. Three, we’re going to put ourselves in a context in an environment with
1:03:10 strangers regularly in the context of something bigger than you, whether it’s a church group,
1:03:15 softball league, nonprofit, whatever it might be. And, and this is what we’re going to do.
1:03:20 And this is what I’m going to recommend if you’re a young man right now. I need you to approach
1:03:26 a stranger and express interest in friendship or exploring a romantic relationship. And those are
1:03:29 weird words. You would never say that. Hey, are you, you know, what are you doing this weekend?
1:03:34 You want to get together or go to a bar, watch the game? Hi, would you, you know, lay on your
1:03:39 wrap or develop your wrap or lack thereof, would you mention grabbing coffee or grabbing a drink?
1:03:47 What have you? And that’s not the win. That’s not the exercise. The win is I need you to get to know.
1:03:51 And unfortunately, that happens a lot, right? And that is, I want you to go up to someone,
1:03:55 do your best, try, say hi, and shoot, would you like to have coffee? And then call me the next day,
1:03:59 and this is what’s going to happen. Most of the time, the answer will have been a no.
1:04:04 It’s usually applied, no, but it’s usually a no. And that, and then I’m going to say,
1:04:08 how are you? And this is what you’re going to tell me. You’re going to say, well, I’m upset,
1:04:14 I’m bum, but yeah, on the whole, I’m fine. That’s the victory. That’s the payoff. Because here’s
1:04:22 the thing. No is the way to success. Specifically, your willingness to put yourself in a room where
1:04:29 you get no’s. If you’re not getting no’s, it means you’re in the wrong room. And you miss all the
1:04:37 shots you don’t take. The number of no’s, no’s are your path to yes and success. So here’s the
1:04:41 victory. You express an interest in friendship, you express an interest in romantic relationship,
1:04:47 and you get to the no. And that’s the victory. Because you find out, you find out, you’re fine,
1:04:52 they’re fine, and it hurts a little less the next time you get to a no. Whether it’s inquiring about
1:04:57 a job you’re not qualified for, whether it’s expressing interest in lunch with someone who
1:05:02 might be able to mentor you or help you, whether it’s expressing interest in someone that you are
1:05:08 physically and romantically attracted to. The reason I’m staying, I get to live the life I lead,
1:05:12 and I get to partner with someone who is much higher character and much hotter than me,
1:05:19 was no. Specifically, my willingness to get to a shit ton of no’s, and then mourn and move on
1:05:28 and get through them. What is the key to success? No. This episode was produced by Jennifer Sanchez.
1:05:33 Our intern is Dan Chalon. Drew Burroughs is our technical director. Thank you for listening to
1:05:37 the Property Pod from the Vox Media Podcast Network. We will catch you on Saturday for No
1:05:43 Mercuno Mouse, as read by George Hahn. And please follow our Prodigy Markets Pod wherever you get
1:05:56 your pods for new episodes every Monday and Thursday. All right, Sean, you can do this promo
1:06:01 talking about all the great Vox Media podcasts that are going to be on stage live at South
1:06:07 by Southwest this March. You just need a big idea to get people’s attention, to help them,
1:06:12 you know, keep them from hitting the skip button. I don’t know. I’m going to throw it out to the
1:06:18 group chat. Kara, do you have any ideas? In these challenging times, we’re a group of mighty hosts
1:06:23 who have banded together to fight disinformation by speaking truth to power, like the Avengers,
1:06:29 but with more spandex. What do you think, Scott? I’m more of an X-man fan myself. I call me professor.
1:06:35 Could I read minds? I can’t really read minds, but I can empathize with anyone having a mid-life
1:06:41 crisis, which is essentially any tech leader so. Minds are important, Scott, but we’re more than
1:06:48 that. I think that you can’t really separate minds from feelings, and we need to talk about
1:06:54 our emotions and explore the layers of our relationships with our partners, co-workers,
1:06:59 our families, neighbors, and our adjacent communities. I just want to add a touch more.
1:07:04 From sports and culture to tech and politics, Vox Media has an all-star lineup of podcasts
1:07:11 that’s great in your feeds, but even better live. That’s it. All stars. Get your game on, go, play,
1:07:18 come see a bunch of Vox Media all stars, and also me at South by Southwest on the Vox Media podcast
1:07:25 stage presented by Smartsheet and Intuit. March 8th through 10th in Austin, Texas. Go to
1:07:33 voxmedia.com/sxsw. You’ll never know if you don’t go. You’ll never shine if you don’t glow.

0:00:03 – I always thought anxiety and worry were the same thing,
0:00:06 but worry is actually, it’s a behavior.
0:00:08 It’s almost like a self soothing behavior.
0:00:10 And people who are very anxious
0:00:12 think that if you just worry enough,
0:00:14 you won’t be anxious anymore.
0:00:17 But instead, worry can make you more anxious.
0:00:19 Like you’re never gonna get to the end of the worrying.
0:00:22 – If it’s a behavior, why not change it?
0:00:24 This week on the gray area,
0:00:27 I talked to Olga Hazan about our personalities
0:00:29 and whether we can change them.
0:00:31 Listen to the gray area with me, Sean Elling.
0:00:34 New episodes every Monday available everywhere.
0:00:38 – Welcome to Office Hours with Prop G.
0:00:40 Today we’re wrapping up our special two-part series,
0:00:42 all about careers, navigating them, advancing them,
0:00:43 maybe even surviving them.
0:00:46 I’ll be sharing my best advice.
0:00:47 I don’t know if it’s the best advice,
0:00:48 but it’s my best advice.
0:00:51 No corporate speak, no BS.
0:00:54 That’s right, NC17, our rated advice.
0:00:56 That’s why we’re here.
0:00:58 I have not read or seen these questions.
0:01:00 So let’s bust right into it, first question.
0:01:05 – Hey, Scott, my name is John
0:01:07 and I’m a recent college graduate based in Florida.
0:01:09 I’m pursuing a career in financial services,
0:01:11 specifically wealth management for households
0:01:14 with a net worth between one and $5 million.
0:01:15 Like many white-collar professionals,
0:01:16 I’m concerned about the impacts
0:01:19 that AI could have on my industry.
0:01:21 While I see AI as a valuable tool,
0:01:24 I worry that the chatbots could offer potential clients
0:01:27 a faster, more knowledgeable, and ultimately free service
0:01:30 posing a pretty big challenge for myself.
0:01:33 Wealth management has always faced issues
0:01:35 from road advisors, fee-cutting firms,
0:01:38 but fortunately, compliance has always saved us.
0:01:40 What advice would you offer a young professional
0:01:42 like myself to future-proof my business
0:01:44 against AI-driven disruptions,
0:01:47 all while continuing to grow and provide value to clients,
0:01:50 especially as a 20-something-year-old with a young face?
0:01:51 I appreciate your time.
0:01:54 – That’s a really thoughtful question
0:01:57 and I think kind of information-intensive
0:02:01 white-collar industries that, to a certain extent,
0:02:04 trade and complexity, there’s a lot of regulation,
0:02:07 there’s a lot of different assets, people have taxes,
0:02:09 it’s complex once you get above
0:02:11 any reasonable set of assets.
0:02:14 And so people want to feel security,
0:02:15 they want an absence of fear,
0:02:19 they want someone nice and young and attractive and bright,
0:02:22 such as you, to show up and actually,
0:02:25 to a certain extent, use as a bit of a disadvantage here,
0:02:26 but give them a sense of confidence
0:02:28 that they’re doing the right thing with their assets.
0:02:31 And in exchange, sometimes or many times,
0:02:33 people are willing to pay 1% to 2% of their assets.
0:02:36 My mom paid this guy 1.5% a year
0:02:38 to basically buy a bunch of shitty stocks for,
0:02:39 and I looked at it and said,
0:02:42 okay, this makes no sense, invest in Vanguard.
0:02:46 This guy can’t pick stocks, he’s some 65-year-old
0:02:48 sitting in a bad office somewhere in Las Vegas,
0:02:50 and he’s underperforming the market,
0:02:52 but he’s really expensive.
0:02:55 The majority of wealth managers in that way class
0:02:58 could be best described as expensive but bad.
0:03:00 They’re high EQ, they make you feel better,
0:03:01 they come over to your house.
0:03:05 Anyone who takes you to dinner or to a sports event
0:03:07 means their fees are way too fucking high.
0:03:09 You know who will never take you to a next game?
0:03:10 Vanguard.
0:03:13 And you are in kind of ground zero,
0:03:15 I think, unfortunately, for disruption around AI.
0:03:16 So what do you do?
0:03:17 First, let’s look at some data.
0:03:18 According to Brookings,
0:03:21 those in business and financial operations occupations
0:03:23 are at the third highest risk level for disruption
0:03:26 from large language models.
0:03:28 Additionally, Citigroup believes that over 50% of jobs
0:03:30 in the financial services industry
0:03:32 could eventually be replaced by AI.
0:03:34 Pew Research found that 62% of Americans
0:03:37 believe that AI will have a major impact on workers,
0:03:39 but just 28% believe that it will have
0:03:40 an impact on them personally.
0:03:42 Recent data suggests that AI adoption rates
0:03:44 are just 5% in some industries,
0:03:45 creating an enormous opportunity for those
0:03:49 who do decide to utilize the new technology.
0:03:52 So my kind of saying around this,
0:03:53 if you’re gonna go into this industry,
0:03:55 you have to go on with your eyes wide open,
0:03:57 and that is you’re gonna have to get to scale
0:03:58 within three to five years.
0:04:00 And that is if you’re just managing
0:04:05 a bunch of like 100,000, $500,000 million portfolios,
0:04:07 at some point, they’re gonna figure it out
0:04:09 and just go to Vanguard.
0:04:11 What you need to do is get to a certain amount of scale
0:04:14 such that you can charge low enough fees
0:04:15 such that quite frankly, you’re worth it.
0:04:17 And then what does it mean?
0:04:18 What is value?
0:04:20 It’s fees over the services you’re offering.
0:04:21 Or maybe it’s the opposite.
0:04:23 Anyways, you get my point.
0:04:26 And in money management, the bad news is,
0:04:29 it’s as difficult or as easy to manage 10 million
0:04:32 as it is a million, but the good news is,
0:04:34 it’s as easy to manage 10 million as 1 million.
0:04:37 So financial services is a lot
0:04:38 like being a real estate broker.
0:04:40 It’s a shitty business for the first 10 years.
0:04:42 It’s going to every fucking event.
0:04:43 It’s giving your card to people.
0:04:45 It’s doing a lot of free work.
0:04:46 It’s doing a ton of work and finding out
0:04:49 that no one has, they don’t really have assets.
0:04:51 But once you have a stable of clients,
0:04:53 it turns into a really good business.
0:04:56 Now, the first thing is you are going to have
0:04:57 to acknowledge the following
0:05:00 or really adopt the following as religion
0:05:01 if you want to be successful.
0:05:03 AI is not going to take your job.
0:05:07 Someone who understands AI is going to take your job.
0:05:09 And that is AI still hallucinates
0:05:11 and the majority of people still do not want to use
0:05:15 an AI Robo Advisor to figure out which funds
0:05:17 they allocate across, right?
0:05:19 Even if you, they decide to go all Vanguard,
0:05:22 there’s still some decisions to be made.
0:05:23 There are Robo Advisors,
0:05:24 but most people don’t want to do that.
0:05:27 You are also going to have to become exceptionally talented
0:05:29 around the integration of how to make money
0:05:30 and how to keep it.
0:05:32 Now, what do I mean by that?
0:05:33 Taxes.
0:05:36 I would say the majority of my value add,
0:05:38 Goldman Sachs manages my money,
0:05:39 but really they don’t manage my money.
0:05:42 What they do is they manage my personal finance.
0:05:44 What do I mean by that?
0:05:45 I have several entities.
0:05:48 They coordinate my lawyers when I’m creating LLCs.
0:05:49 They give me tax advice,
0:05:52 which is really the kind of value add.
0:05:54 And that is, I’ll say, okay,
0:05:57 I am thinking of buying this or I’m buying a home.
0:05:59 Should I put it in an LLC?
0:06:02 If I put it in an LLC,
0:06:05 it might trigger a increase in taxes
0:06:06 because the home gets reappraised.
0:06:09 But if I put it into an LLC,
0:06:11 I can depreciate it a 2% a year.
0:06:13 And if I hold on to it for two years
0:06:14 and make some money off of it,
0:06:16 it qualifies for 1031 exchange.
0:06:18 If you sound confused, trust your instincts.
0:06:19 It is really fucking confusing.
0:06:22 Keep in mind that essentially the tax code
0:06:25 has been weaponized by very wealthy people.
0:06:28 It’s gone from 400 pages, I think to 4,000.
0:06:30 I read somewhere it’s gone to 7,000.
0:06:32 And those additional pages are basically loopholes
0:06:34 for the rich or essentially an effort
0:06:37 to transfer wealth in the lower and middle income households
0:06:39 to the wealthy who have aggregated
0:06:41 a disproportionate amount of the spoils
0:06:43 over the last 40 years.
0:06:46 But in that complexity is your value add.
0:06:48 And that is you can understand the difference between,
0:06:50 all right, I’m gonna help you allocate your assets.
0:06:52 We’re gonna go into low cost funds,
0:06:54 but I’m gonna help you pick them and help you diversify.
0:06:57 I’m gonna do the hard work of understanding
0:06:59 where you’re too concentrated.
0:07:01 I’m gonna establish a relationship with you.
0:07:04 I’m gonna do a lot of work for you kind of off the clock.
0:07:07 And I’m really gonna think thoughtfully
0:07:10 and come to you proactively with different tax ideas
0:07:14 or ways to essentially become more tax efficient.
0:07:16 It was like Wayne Hizanga, the founder blockbuster
0:07:19 used to run those ads for the state of Florida
0:07:22 talking about Florida’s zero income tax
0:07:23 or zero state income tax.
0:07:25 And you used to say, it’s not what you earn,
0:07:26 it’s what you keep.
0:07:29 So to a certain extent, a financial advisor in my view
0:07:32 is gonna have less value add on how you make money.
0:07:33 How do you make money?
0:07:35 You diversify and you’re going to low cost index funds,
0:07:36 all right?
0:07:37 But how do you keep money
0:07:40 is understanding their specific personal situation
0:07:42 and how they figure out and navigate
0:07:45 the incredibly complex tax code.
0:07:47 And you’re gonna have to also be the one
0:07:50 to cut your own fees as their assets grow.
0:07:53 Ritholt’s management, my friend Barry Ritholtz
0:07:56 and his partner, Josh Brown of CNBC fame,
0:07:59 they run a, I wouldn’t even call it a hedge fund,
0:08:00 I’d call it a wealth advisory fund.
0:08:02 And as they have grown their assets,
0:08:05 they have lowered their fees and they are very thoughtful
0:08:07 and give personalized advice to their clients,
0:08:10 which Vanguard, they may claim to do it,
0:08:12 but they really don’t.
0:08:13 And as a result, people decide,
0:08:15 okay, Vanguard would be less expensive,
0:08:17 but these guys are worth it
0:08:19 because they know my personal situation,
0:08:20 they’re willing to meet with me,
0:08:23 they walk me through ideas, they’re proactive.
0:08:26 So you are gonna have to become an AI warrior, my friend.
0:08:28 You’re gonna have to figure out a way
0:08:30 to get people’s financial complexion,
0:08:32 upload their credit cards.
0:08:34 Christ, figure out a way, go to that app
0:08:36 where it tells them how many subscriptions they have.
0:08:37 The first thing we’re gonna do,
0:08:39 we’re gonna focus on saving your money.
0:08:41 Give me your taxes, I’m gonna,
0:08:43 and then you’re gonna upload it to different LLMs
0:08:45 and try and generate ideas for tax savings.
0:08:48 You are going to be an AI warrior.
0:08:49 This is what you want.
0:08:51 This is what you want.
0:08:52 When your competitor walks in
0:08:54 to pitch them on managing their money,
0:08:57 you walk in with a Panzertank.
0:08:59 And that Panzertank is knowledge,
0:09:00 it’s willingness to do good work,
0:09:02 understand their personal situation
0:09:04 and understanding of how it all dovetails
0:09:08 with the tax code, and you understand how to use AI.
0:09:09 That is your Panzertank.
0:09:11 And the guy next to you or the gal next to you
0:09:12 who shows up after you,
0:09:15 they’re showing up fighting on horseback
0:09:16 because you understand,
0:09:19 you’re one of the 5% that understands how to use AI.
0:09:21 Let me finish where I began.
0:09:23 AI is not gonna take your job.
0:09:27 Somebody who understands AI is gonna take your job.
0:09:28 Question number two.
0:09:30 – Hi, Scott, I’m a big fan.
0:09:32 I’m a 23-year-old living in suburban New York.
0:09:35 I work at a mid-size physical good supply company
0:09:36 and maintaining and developing
0:09:39 some of their warehouse and logistical operations software.
0:09:41 I’m curious about starting my own distribution type business
0:09:45 and I wanted to talk to real-life people about this.
0:09:48 What advice would you give to find and talk to actual people
0:09:49 in an industry that you’re curious about entering,
0:09:51 especially if you’re a little introverted
0:09:54 and scared of sounding stupid?
0:09:56 – So anonymous, so you’re a 23-year-old
0:09:59 and my understanding is you’re thinking about
0:10:01 starting your own type of distribution business.
0:10:04 I always thought, so I started my first business,
0:10:06 I’ve been starting business my whole life,
0:10:08 but essentially my entire professional career
0:10:10 has been entrepreneurship except for a two-year-senate,
0:10:12 Morgan Stanley, that I was awful at
0:10:14 and only confirmed that I should be an entrepreneur.
0:10:15 But anyways, a couple things.
0:10:17 One, the way you start a business,
0:10:20 I mean, it’s good that you’re talking to people
0:10:22 and I’m not suggesting you don’t,
0:10:24 but the way you start a business is by getting a client.
0:10:27 A mistake I have consistently made, consistently made,
0:10:31 I still make it, is believing that spending money
0:10:32 is building a business.
0:10:34 No, it’s not, it’s making money that builds a business.
0:10:37 So the best way to test this idea
0:10:40 is to see if you could get a client.
0:10:42 And I’m not sure, I don’t know about the competitive dynamics
0:10:45 here or the situation with your current company,
0:10:47 but I would try and find a client
0:10:49 or pitch a potential client.
0:10:52 Yeah, talk to people, get some advice.
0:10:55 If you’re an introvert and you aren’t comfortable selling,
0:10:57 then you need to either find somebody who can sell
0:10:58 and make them your partner
0:11:00 or you shouldn’t be an entrepreneur.
0:11:03 Let me be clear, entrepreneur is a synonym
0:11:06 for salesman or salesperson.
0:11:08 You know what being an entrepreneur is?
0:11:12 It’s getting out a big spoon every day and eating shit.
0:11:14 You’re constantly selling.
0:11:17 I’m not talking about just selling clients, selling investors.
0:11:19 The most selling I have ever done,
0:11:21 I always had good products at my firms
0:11:23 and I felt like more than selling, I was closing
0:11:25 ’cause I would create content marketing
0:11:30 to try and create content that we then get inbound leads.
0:11:31 I used to tell our sales team,
0:11:33 you’re not selling or closing
0:11:35 because we did a really good job of content marketing.
0:11:38 The biggest sell I ever did was trying
0:11:40 to find really talented people
0:11:42 and then convince them to join my firm
0:11:44 when they had offers from Google and Salesforce
0:11:46 or trying to convince people to stay
0:11:48 that we would get to a liquidity event
0:11:49 and they would get economic security with me
0:11:52 as opposed to see above going to fucking Metta
0:11:53 where they were awarded options
0:11:56 that were already $300,000 in the money,
0:11:58 you are always selling.
0:12:00 And if you are not comfortable with that
0:12:02 or you can’t get comfortable with that,
0:12:05 then you need to find a partner who is comfortable with it.
0:12:08 There are some people that are so good at what they do
0:12:11 that they can build a business without selling.
0:12:14 My landscaper is this really charming guy
0:12:16 who will bring me out and show me,
0:12:18 he’s very emotionally manipulative.
0:12:21 He’ll come out and show me this bougain via
0:12:24 that he’s helping us drape over our garage.
0:12:26 I absolutely love bougain via.
0:12:28 It reminds me of my childhood in Orange County
0:12:29 and my dad’s super into them.
0:12:32 And he just picked up on the fact that I love bougain via
0:12:34 so occasionally he drags me out and he shows me this thing
0:12:36 and he literally goes over and kind of hugs it
0:12:38 like he’s in love with it.
0:12:39 That is selling.
0:12:41 That is developing a relationship
0:12:45 with a professor/podcaster that has an affection
0:12:46 for bougain via.
0:12:49 If you’re not comfortable maintaining
0:12:51 those sorts of relationships,
0:12:54 you’re gonna have to find someone who is.
0:12:55 So absolutely go out and talk to people.
0:12:58 But again, the way you start a business,
0:13:02 what builds a business is revenues, not expenses.
0:13:06 And at 23, it sounds like you were doing incredibly well.
0:13:07 The other thing I would ask yourself
0:13:10 or maybe get a kitchen cabinet together and ask them
0:13:12 is would you benefit from another couple of years
0:13:15 experience at your current firm?
0:13:15 Are you learning?
0:13:17 Do you have senior level sponsorship?
0:13:18 If you have those things,
0:13:20 do you want to think about sticking around for a while?
0:13:22 Is there an opportunity to grow with that company
0:13:24 if they find out you’re thinking about leaving?
0:13:25 What always really upset me
0:13:27 was when there was young talented people who left
0:13:28 and I’d say, where are you going?
0:13:31 And I think, that is just the worst fucking job ever.
0:13:32 What are you doing?
0:13:33 And they think, well, I want to be in a position
0:13:34 where I can manage people.
0:13:36 I’m like, well, why didn’t you come and ask me?
0:13:38 I’d have you manage some people.
0:13:40 Is there an opportunity at your current firm?
0:13:42 Develop a kitchen cabinet.
0:13:44 Think about whether you might benefit
0:13:46 from staying a year or two years
0:13:48 and think about how you get that first client
0:13:50 and if you are not comfortable selling,
0:13:51 then you need to find someone
0:13:53 to bring in the organization pronto
0:13:54 that is comfortable selling.
0:13:56 ‘Cause that’s what it means to be an entrepreneur,
0:13:57 my brother.
0:14:01 But again, 23 thinking this way, you’re doing really well.
0:14:04 We have one quick break before our final question.
0:14:04 Stay with us.
0:14:10 We’re taking Box Media podcasts on the road
0:14:11 and heading back to Austin
0:14:13 for the South by Southwest Festival,
0:14:15 March 8th to the 10th.
0:14:16 What is real?
0:14:19 We’ll be doing special live episodes
0:14:20 of hit shows, including Pivot.
0:14:21 That’s right.
0:14:23 That dog’s going to the great state of Texas.
0:14:25 Where should we begin?
0:14:26 With Esther Perrell,
0:14:29 a Touch More with Sue Bird and Megan Rapinoe,
0:14:32 not just football with Cam Hayward and more
0:14:34 presented by Smartsheet.
0:14:37 The Box Media podcast stage at South by Southwest
0:14:40 is open to all South by Southwest badge holders.
0:14:42 We hope to see you at the Austin Convention Center soon.
0:14:46 Visit voxmedia.com/SXSW
0:14:47 to learn more.
0:14:50 That’s voxmedia.com/SXSW.
0:14:57 This week on ProfG Markets,
0:14:58 we speak with Mike Moffitt,
0:15:01 founding director of the University of Ottawa’s
0:15:02 Missing Middle Initiative
0:15:05 and a former economic advisor to Justin Trudeau.
0:15:07 We dive into the state of Canadian politics
0:15:10 and we get his take on the biggest challenges
0:15:11 facing Canada’s economy.
0:15:14 Canada’s economy is like three oligopolies
0:15:15 in a trench coat.
0:15:17 We have a lot of inequality that way.
0:15:21 We have high levels of market concentration
0:15:24 because we have this tension in Canada
0:15:26 where we want things to be Canadian.
0:15:28 We want Canadian ownership.
0:15:30 But when you do that, you create a moat.
0:15:33 And whenever you create barriers to entry,
0:15:36 you’re going to naturally create oligopolies.
0:15:38 You can find that conversation
0:15:41 exclusively on the ProfG Markets podcast.
0:15:45 – Welcome back, question number three.
0:15:47 – Hi, ProfG.
0:15:49 I’ve recently transitioned to academia
0:15:52 after spending about 25 years in industry.
0:15:54 While I truly enjoy my new roles
0:15:57 with teaching, student advising, and research,
0:15:59 I still enjoy staying connected to industry
0:16:02 through consulting and professional advising.
0:16:03 I’ve heard you talk about the importance
0:16:05 of becoming a domain expert in your field
0:16:07 and I was curious,
0:16:10 where do you see efforts best spent for maximum impact?
0:16:14 Should I focus on podcasting, writing, industry presentations
0:16:16 or any other options?
0:16:19 You seem to excel at doing all of these.
0:16:21 What do you think has the biggest impact
0:16:24 and what do you personally enjoy the most?
0:16:27 Lastly, I just wanted to say that I really appreciate
0:16:30 the insights and thoughts you put into your work.
0:16:32 Your perspectives are not only fascinating,
0:16:34 but also make me sound much more knowledgeable
0:16:35 than I really am.
0:16:37 I’d love to buy you a drink to thank you
0:16:39 the next time you’re in Colorado.
0:16:41 Looking forward to hearing your thoughts.
0:16:44 – So first off anonymous, you shouldn’t be anonymous.
0:16:47 You’re not saying anything that would threaten your job
0:16:48 and you sound like such a lovely guy.
0:16:51 And also you have more confidence
0:16:53 than I did when I was your age.
0:16:55 You’re able to express admiration for other people.
0:16:57 I had this fucked up notion of masculinity
0:16:58 when I was your age.
0:17:01 You sound like you’re 20s or 30s.
0:17:04 That if I was impressed, especially with another guy,
0:17:07 it somehow took away from how impressive I was.
0:17:12 I didn’t have the confidence to express admiration
0:17:14 or heat praise on other people.
0:17:17 So you’re already well ahead of the game
0:17:18 and you got a nice voice.
0:17:21 And it was, it sounds to me like you’re just set up
0:17:23 really well for success.
0:17:24 Now transitioning to academia.
0:17:30 So first off, I think academia is underrated as a career.
0:17:33 It is wonderful.
0:17:34 It attracts a lot of lone wolves
0:17:36 ’cause you can do a lot of stuff on your own.
0:17:38 There is some problems with academia right now.
0:17:40 One, it’s become morally corrupt
0:17:41 based on an exclusionary rejection
0:17:43 as bullshit culture of not letting in kids,
0:17:45 despite the fact we have the capital
0:17:47 to double, triple or quintuple our freshman class.
0:17:49 That’s another talk show.
0:17:52 And there’s too many old people who refused to leave
0:17:56 that were the man or the woman in gap one accounting
0:17:58 or understood the difference between black water
0:18:00 and blue water economics in 1978.
0:18:02 And now they’re 80 and won’t leave.
0:18:04 And basically just show up to faculty meetings
0:18:05 and they’re hugely disruptive.
0:18:08 I work with what I think is probably the best faculty
0:18:11 in America at NYU Stern.
0:18:16 And 10% of any faculty are just so inspiring.
0:18:19 These are people who give up a dramatic amount
0:18:22 of compensation ’cause they love teaching
0:18:24 and they are just so good at what they do
0:18:26 and their relentless pursuit of the truth,
0:18:29 especially in this age is just inspiring
0:18:32 and they’re great storytellers and they care about people.
0:18:34 Anyways, but the downside of academia
0:18:38 is there’s just a third of the people at any institution
0:18:41 that quite frankly just shouldn’t be there,
0:18:44 aren’t pulling their weight and because of tenure,
0:18:46 which is essentially a guild for the unproductive,
0:18:49 tenure is nothing but student debt in my viewpoint.
0:18:52 Anyways, I don’t know how I got here.
0:18:55 What mediums would be best for you?
0:18:58 You’ve got an amazing platform.
0:19:00 One thing I’ve really benefited from at NYU,
0:19:02 I say a lot of provocative, aggressive things.
0:19:05 I think without the halo of the NYU brand,
0:19:07 people might just think I was an asshole
0:19:10 or maybe a creative asshole or maybe an interesting asshole,
0:19:11 but mostly just an asshole.
0:19:13 But I think people take what I say more seriously
0:19:16 because I do try and show some fidelity
0:19:19 to the institution and to academia
0:19:22 by having a team of people that research things,
0:19:24 we fact check, we go over stuff,
0:19:27 we try and marinate in data.
0:19:29 I do have an approach to teaching.
0:19:32 Anyways, I do think it’s a very powerful platform.
0:19:34 So what mediums?
0:19:38 All strategy comes down to one thing.
0:19:43 What can I do or what can we do that is really hard?
0:19:46 That’s all strategy is.
0:19:50 What can we do that is really hard?
0:19:54 We have an amazing story about scale and e-commerce
0:19:56 or scale around streaming.
0:19:58 So we can raise so much cheap capital
0:20:01 that we’re gonna spend more money on warehouses and planes
0:20:03 or on original content.
0:20:05 We’re gonna spend $18 billion a year on original content
0:20:07 which is more than we spent on the entire film
0:20:09 or television industry the decade of the 80s.
0:20:11 That is really hard to do.
0:20:13 So they lean into their advantage
0:20:16 of just overwhelming the competition with capital
0:20:18 via great storytelling and access to cheap capital.
0:20:21 That is really hard to do.
0:20:22 You need to decide, all right,
0:20:24 what would be really hard to do?
0:20:25 And the way you figure that out
0:20:27 is you ask yourself, first,
0:20:29 what am I really good at?
0:20:30 Could I start a podcast?
0:20:33 And if I do a podcast, am I good at it?
0:20:34 Do I have the ability to get good guests?
0:20:36 Do I have a good voice?
0:20:38 Am I compelling in this medium?
0:20:40 Do I find that people wanna listen to me?
0:20:41 Do you write well?
0:20:43 Can you go on LinkedIn and start writing
0:20:45 about your specific domain
0:20:48 and immediately get people subscribing and following?
0:20:50 Are you really good on TikTok?
0:20:54 You wanna figure out what is your medium, right?
0:20:55 And the way you figure out what is your medium
0:20:57 is you pick one or two and say,
0:21:00 “I need to be in the top 10% in terms of followers.”
0:21:03 This is an assignment I give my class and brand strategy.
0:21:05 I tell them that they must pick a medium.
0:21:07 It can be threads, it can be acts,
0:21:08 it can be Twitter, it can be PowerPoint.
0:21:10 And then they need to figure out a metric
0:21:12 that says by the end of the class,
0:21:14 I’m going to be in the top desile.
0:21:16 And you can figure out those numbers.
0:21:18 What is the number of followers you need on Instagram,
0:21:20 on Reels, to be in the top desile?
0:21:23 And it’ll tell you, this is how many followers you need.
0:21:27 So you need to figure out what is your medium.
0:21:31 What I enjoy the most is writing because it’s the hardest.
0:21:33 But when you write something worthwhile, it moves people.
0:21:35 There’s something about the written word
0:21:37 that when it’s done well and you’ve taken the time
0:21:40 and the energy to fact check, to proof it,
0:21:42 to make it sound elegant, to have a good twist of phrase,
0:21:47 to make people feel something, it really resonates.
0:21:47 It sticks with them.
0:21:50 If I go on Morning Joe or The View and I kill it,
0:21:53 it gets a huge sugar high on YouTube.
0:21:56 And it’s fun and it’s rewarding.
0:21:59 But there’s nothing like writing something
0:22:01 that where you took the time, you were up,
0:22:03 you proofed it, you fact-checked it,
0:22:05 and it resonates and it moves people.
0:22:08 Moves their emotions or it highlights something
0:22:11 that other people were thinking but not saying.
0:22:15 That for me is what I want to say is the most enjoyable.
0:22:18 It’s the most rewarding because it’s the hardest thing to do.
0:22:20 So the first thing I ask, can you write well?
0:22:23 Oh my gosh, if you can write well,
0:22:25 your brand immediately says to people,
0:22:26 you’re smart and you’re educated,
0:22:28 which is a good chocolate and peanut butter,
0:22:30 not only academia but in a professional world.
0:22:31 Is that your medium?
0:22:33 Or are you really good at presentations?
0:22:35 Do you want to figure out a way to start speaking in groups?
0:22:38 Do you want to call people, conferences and say,
0:22:42 hi, I’m a professor of X, I want to come talk about this?
0:22:47 I didn’t get, 98% of my time on stage, I don’t get paid.
0:22:50 I’ve returned all my compensation to NYU
0:22:51 so they don’t pay me.
0:22:53 And the majority of the talks I gave
0:22:56 for the first 30 years of my career,
0:22:58 I wasn’t getting paid for, is that true?
0:23:00 Consulting, I guess I was getting paid a lot.
0:23:02 But I did a lot of free speaking gigs.
0:23:07 Now I charge 50K for a virtual 200K for an in-person
0:23:10 and 400K if I have to go to the Gulf or Asia.
0:23:12 I don’t get a lot of those but I do get some of those.
0:23:15 Now, I am boasting but there is a reason.
0:23:19 It is taking me 20 or 30 years of deciding
0:23:23 that okay, speaking is probably what I am best at
0:23:25 and I’m gonna get fucking amazing at it.
0:23:27 I have a team of people pulling together
0:23:30 150 slide presentations.
0:23:31 I go through it like it’s a Broadway show.
0:23:35 I rehearse it, I think of video, I think of sound,
0:23:37 I think of emotional highs and lows.
0:23:39 And every time I give one of these presentations
0:23:42 or talks and I do about 40 or 50 a year,
0:23:44 I immediately right afterwards go back to the team
0:23:47 and say, we hit a narrative arc here
0:23:48 that just didn’t feel right.
0:23:51 This joke didn’t land, this was really good.
0:23:53 Let’s get data on this, let’s compare this to this.
0:23:55 It’s like I’m putting on a Broadway show or a movie
0:23:58 but every time I run the movie I get the audience’s reaction
0:24:01 and I get to re-cut the film, right?
0:24:04 I’m okay on Threads or Blue Sky.
0:24:06 I like to think I’m a good podcaster.
0:24:09 I’m not sure I’m great.
0:24:11 I like writing, I’m good, I’m not sure I’m great
0:24:15 but I aspire to be world-class in front of an audience
0:24:20 and it lends itself really well to my strengths.
0:24:23 The larger the crowd, the more charming and engaging I am.
0:24:24 I’m not very good one-on-one.
0:24:27 One-on-one I come across as insecure yet aloof.
0:24:29 I’m not good on the phone.
0:24:32 And you wanna figure out what mediums you’re not good at
0:24:33 and then find one where you think,
0:24:35 could I be the best in the world
0:24:37 and really lean into that medium?
0:24:40 In terms of the content, in terms of the content,
0:24:44 the specific crowds out the general.
0:24:45 I was in the field of brand strategy.
0:24:47 That’s a pretty specific area.
0:24:49 It wasn’t design, it wasn’t marketing,
0:24:51 it wasn’t media planning.
0:24:54 It was managing your brands as if they were assets,
0:24:57 like a portfolio in a mutual fund.
0:24:59 And then I went even more specific.
0:25:00 I started collecting data
0:25:04 on the digital footprint of luxury brands.
0:25:06 Not the digital footprint of all consumer brands
0:25:08 but the digital footprint of luxury brands.
0:25:11 And I started doing rankings out of NYU
0:25:14 on which luxury brands were the most digitally competent.
0:25:15 And I parsed it into five areas.
0:25:18 Genius gifted, average challenged and feeble.
0:25:21 By the way, rankings are incredibly powerful
0:25:23 when they come out of an academic institution
0:25:25 because you have to do the work.
0:25:27 You have to fact check the shit out of it
0:25:28 and then you put it out.
0:25:30 And wow, and the thing about a ranking is,
0:25:34 it’s not about who comes first, it’s about who comes last.
0:25:35 And that’s what I was willing to do.
0:25:38 Most rankings from institutions list the top 10
0:25:39 and give out awards.
0:25:41 No, I was gonna do a ranking that said,
0:25:43 okay, whoever it was, David Ehrman,
0:25:45 you’re literally the worst brand and jewelry
0:25:47 as it relates to digital footprint.
0:25:51 Anyway, go very, don’t be afraid to go very niche,
0:25:54 pick your medium and commit to being in the top 10,
0:25:57 if not the top 1% and don’t be afraid
0:25:59 to switch mediums in terms of your focus.
0:26:01 But you do create a flywheel.
0:26:05 I do all of it because I find it’s reinforcing.
0:26:08 Long-winded way of saying the specific crowds
0:26:10 at the general, find your medium,
0:26:12 commit to being in the top 10% within a year,
0:26:15 the top 1% within two to three years.
0:26:16 Don’t be afraid to switch mediums.
0:26:20 But my friend in academia, if you write well,
0:26:22 that is probably gonna be your go-to.
0:26:23 That is the hardest thing I do.
0:26:25 It is the most rewarding and quite frankly,
0:26:28 I believe it’s the most impressive.
0:26:31 Also, also in 50 years, it’s unlikely people
0:26:32 are gonna be watching your videos.
0:26:35 It’s unlikely people are gonna see your social,
0:26:38 but your kids will likely read what you have written.
0:26:42 And I find that nice to think about and very comforting.
0:26:44 Congratulations on your transition to academia.
0:26:46 I think it is a wonderful way to make a living.
0:26:48 Thank you Anonymous from Colorado.
0:26:51 That’s all for this episode.
0:26:52 If you’d like to submit a question,
0:26:53 please email a voice recording
0:26:55 to officehours@proptimedia.com.
0:26:58 Again, that’s officehours@proptimedia.com.
0:27:01 (upbeat music)
0:27:08 This episode was produced by Jennifer Sanchez.
0:27:10 Our intern is Dan Chalon.
0:27:12 Drew Burroughs is our technical director.
0:27:13 Thank you for listening to the PropG Pod
0:27:15 from the Box Media Podcast Network.
0:27:18 We will catch you on Saturday for No Mercino Mouse,
0:27:20 as read by George Hahn.
0:27:22 And please follow our PropG Markets Pod
0:27:24 wherever you get your pods for new episodes
0:27:26 every Monday and Thursday.
0:27:29 (upbeat music)