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0:01:36 Welcome to the Property Pod’s Office Hours.
0:01:38 This is the part of the show where we answer questions
0:01:40 about business, big tech entrepreneurship
0:01:41 and whatever else is on your mind.
0:01:43 If you’d like to submit a question,
0:01:45 please email a voice recording
0:01:46 to officehours@propertymedia.com.
0:01:49 Again, that’s officehours@propertymedia.com.
0:01:52 So with that, first question I have not seen
0:01:53 or read these questions.
0:01:57 – Hi Scott, I’m Adam from Chicago.
0:02:00 I’m a professor at a large public university
0:02:01 and I’m a big fan of the pod,
0:02:04 especially your views on higher education.
0:02:06 I had a prediction for 2025
0:02:08 that I wanted to share to get your perspective.
0:02:10 I think the Google Antitrust case
0:02:12 will lead to a breakup of Google
0:02:14 into four separate companies.
0:02:18 Search and AI, cloud, YouTube and Waymo.
0:02:21 This will unlock significant value for a mega cap stock
0:02:24 that is underperformed compared to its peers.
0:02:28 If this happens, other mega caps may follow suit.
0:02:29 What do you think?
0:02:30 And thanks.
0:02:34 – Adam from Chicago, thanks for the question professor.
0:02:37 You’re thinking rationally and I have learned the hard way.
0:02:39 That’s not how this market works.
0:02:42 What’s going on with the Google Antitrust case in 2020?
0:02:43 Trump’s Justice Department
0:02:45 through the Antitrust Hammer at Google,
0:02:49 claiming they had an illegal monopoly in online search.
0:02:49 This is a big deal.
0:02:51 It was the first antitrust case of its kind
0:02:53 in the internet era.
0:02:54 Since then governments have argued
0:02:55 that Google made illegal deals
0:02:59 to ensure its search engine is the default on most devices.
0:03:02 Now the stakes are getting higher.
0:03:04 A judge already ruled against Google
0:03:06 in part of the case and a second trial is coming up in April
0:03:08 to figure out what kind of penalty they might face.
0:03:10 They were found guilty of monopoly maintenance
0:03:13 mostly ’cause they pay the biggest fee to Apple
0:03:14 to be the default search engine.
0:03:16 And they thought no one else could compete with them.
0:03:18 It’s anti-competitive behavior.
0:03:19 They’re trying to figure out
0:03:22 what the remedies of this guilty verdict would be.
0:03:24 And they could be a regulator sitting there
0:03:25 and telling them that you can’t do this,
0:03:29 you can’t do this, a breakup, some sort of fine.
0:03:30 So the question you’re asking is,
0:03:32 could the remedy be a breakup
0:03:34 and what would that breakup look like?
0:03:36 I can’t see them being broke up
0:03:37 into four distinct units.
0:03:39 And you’re saying a deconglomeration
0:03:40 would add more shareholder value.
0:03:42 And I actually believe you.
0:03:43 I think in conglomates what you tend to find
0:03:47 is the whole is less than the sum of its parts.
0:03:49 And the thing you didn’t mention is that
0:03:52 I’ve done some analysis around YouTube.
0:03:53 If you asked most people,
0:03:54 what is the leading streaming platform?
0:03:56 They’d say Netflix and they would be wrong.
0:03:59 Netflix commends about 8% of total viewership time,
0:04:01 whereas Google, excuse me while Alphabet’s YouTube
0:04:03 gets about 10%.
0:04:06 And if you applied the same multiple on revenues,
0:04:08 YouTube does more revenues than Netflix.
0:04:10 And if you applied the same multiple YouTube
0:04:12 on its own entity as a spin,
0:04:15 would be worth somewhere between five and $600 billion.
0:04:16 It’d be worth more than Bank of America
0:04:18 or LVMH or sales force.
0:04:21 And the disposition of assets or a spin of assets
0:04:23 and a conglomerate structure
0:04:25 creates more value per your point.
0:04:29 Why? Because CEOs and controlling shareholders
0:04:30 love to have a big, fat fucking company,
0:04:35 especially one of this power and prosperity.
0:04:37 And they don’t like managing different ones.
0:04:39 And CEOs love a bigger company
0:04:41 because their compensation is based on two things,
0:04:42 the performance of the company
0:04:44 and how big the company is.
0:04:46 In addition, it makes them sleep easier at night
0:04:49 when they conglomerize because if YouTube isn’t doing well,
0:04:52 then most likely their cloud or Waymo is doing well.
0:04:54 And the fact of the matter is,
0:04:58 is that investors don’t need CEOs to diversify for them.
0:05:02 I could go buy my own video search engine called YouTube.
0:05:03 I would like to be able to do that.
0:05:04 I’d like to be able to specifically say
0:05:06 I like, I don’t believe in autonomous driving,
0:05:07 but I believe in video search.
0:05:10 I wanna invest in YouTube and not Waymo.
0:05:13 Or I think that search is challenged by AI
0:05:15 or I think it’s gonna be just fine
0:05:16 and it’s been overly punished.
0:05:17 I wanted to go into search,
0:05:19 but I don’t wanna be in the cloud, whatever, right?
0:05:21 Unfortunately, they don’t do that.
0:05:23 They conglomerize and they claim there’s efficiencies
0:05:25 and there may be, there may be so many efficiencies here
0:05:28 between coordinating and cooperating
0:05:31 that they in fact make it impossible for anyone else
0:05:33 or both the buy on the buy and the sell side
0:05:36 and digital marketing and they make the market.
0:05:38 Anyways, I just don’t see this happening.
0:05:40 I wonder if there will be a breakup.
0:05:41 I hope there is.
0:05:43 It would probably be something around their ad tech.
0:05:46 They probably maybe have to spin the old double click
0:05:48 or their ad stack or their ad model
0:05:50 or their ad technology, if you will.
0:05:52 But the idea, you’re looking at this rationally
0:05:55 from an investor standpoint, what would make the most sense.
0:05:56 But here’s the thing.
0:05:58 These companies are run by individuals
0:06:00 and they love having sitting on the iron throne
0:06:04 of all of the seven realms, not just Westeros.
0:06:05 So while what you’re saying makes sense,
0:06:07 it’s just unlikely to happen.
0:06:08 These organizations are run by people.
0:06:10 They have different objectives
0:06:13 than just doing what’s right for shareholders, if you will.
0:06:16 The biggest tax cut in the world right now
0:06:18 would be if China and the US made up,
0:06:20 they have manufacturing, we have consumer demand,
0:06:22 we have debt, they have cash.
0:06:25 I mean, for God’s sakes, it’s Fred and fucking Ginger
0:06:26 for the global economy.
0:06:28 That would be the biggest tax cut.
0:06:29 The second biggest tax cut would be
0:06:31 if we took the big guys, Amazon, Alphabet,
0:06:35 Google and Apple and broke them up into 11 or 12 companies.
0:06:37 That would be the best way to oxygenate the marketplace.
0:06:39 They have such concentration of power
0:06:41 in their specific categories
0:06:43 that the rents they charge on consumers,
0:06:45 whether it’s what they charge you for your iPhone
0:06:49 or the ad fees on Amazon,
0:06:52 which have gone from about 20%
0:06:54 of total gross merchandise volume to like 45%.
0:06:56 All the rents need to come down on businesses.
0:06:59 Biggest corporate tax cut in history wouldn’t be under Trump.
0:07:01 It would be under the FTC or DOJ
0:07:02 breaking these companies up.
0:07:03 Anyways, that’s my rant.
0:07:05 We’ll see what happens here, Professor,
0:07:08 but call me skeptical.
0:07:09 Question number two.
0:07:13 Hi, Prof. G. My name is Ned from Melbourne, Australia.
0:07:15 I love your work and thank you for contributing
0:07:19 to making our discourse less course and more informed.
0:07:21 You’ve often spoken about the need
0:07:23 to agegate social media.
0:07:26 The Australian government has recently announced plans
0:07:28 to impose a minimum age of 16 years
0:07:31 to access social media platforms.
0:07:34 The concept has broadly bipartisan support.
0:07:36 However, there are some real practical issues
0:07:38 that are unfolding, namely how to verify
0:07:41 that someone is indeed over 16.
0:07:44 Options discussed include biometric verification
0:07:47 and uploading approved forms of ID.
0:07:50 Given the well-founded security and privacy concerns,
0:07:52 this is in danger of scuppering
0:07:55 this otherwise worthwhile policy initiative.
0:07:56 Would love to hear your thoughts
0:07:59 and thanks again for all that you do.
0:08:00 Thanks for the thoughtful question,
0:08:01 Nidal from Australia.
0:08:05 So the most influential scholar in the world right now
0:08:06 is my colleague, Jonathan Hyde.
0:08:09 And everything we’re talking about here,
0:08:11 funds being banned in schools,
0:08:13 social media being banned for kids under the age of 16,
0:08:15 has largely been a function
0:08:18 of Jonathan’s landmark book, “The Anxious Generation.”
0:08:21 So effectively Australia is planning
0:08:23 to make social media platforms take action
0:08:24 to prevent online harms,
0:08:26 including bullying, predatory behavior,
0:08:28 and harmful content pushed by algorithms.
0:08:31 They’re calling it the digital duty of care.
0:08:33 Platforms including TikTok, Instagram, and X
0:08:35 will need to actively protect users
0:08:38 by regularly reviewing and addressing safety risks.
0:08:40 The plan will ban kids under 16
0:08:42 from these social media platforms.
0:08:45 Some critics argue that banning younger users
0:08:47 of these platforms could reduce the pressure
0:08:50 on these platforms to improve safety features.
0:08:51 That’s fucking ridiculous.
0:08:54 If young people aren’t on there,
0:08:56 that will decrease the likelihood
0:08:59 they’ll put in safety restrictions for young people.
0:09:00 I mean, that makes no sense.
0:09:01 Literally these people have no shame.
0:09:04 And my favorite is that it would squelch free speech.
0:09:05 Yeah, my 13-year-old needs three speech
0:09:08 more than he needs protection from this bullshit
0:09:10 that makes him insecure and want to self-harm.
0:09:12 Yeah, okay, free speech for 13-year-olds.
0:09:13 That’s our top priority.
0:09:16 The legislation covers a wide range of harms,
0:09:18 including mental health, impacts on young people,
0:09:20 harm for practices, and illegal activities.
0:09:22 There will be no exemptions for children
0:09:25 with parental consent or who already have accounts.
0:09:26 What’s the plan now?
0:09:30 Australia is currently trialing an age verification system
0:09:32 that includes methods, including biometrics
0:09:34 and government identification to help block children
0:09:36 from accessing these social media platforms.
0:09:39 So these companies, social media companies,
0:09:41 or companies with a social offering,
0:09:45 make $11 billion a year advertising to people
0:09:48 under the age of 18.
0:09:50 And when you take a multiple of whatever it is,
0:09:53 10 to 15 times revenues, you’re talking about essentially
0:09:55 somewhere between $100 billion and a quarter of a trillion
0:09:59 dollars by their ability to continue to advertise
0:10:01 to young people despite the harms.
0:10:03 So they’re gonna do everything they can.
0:10:05 They’re gonna nod or pretend to give a flying fuck
0:10:07 about the Commonwealth and children they don’t.
0:10:09 By the way, a majority of tech executives
0:10:12 do not allow their kids on smartphones or on social media.
0:10:13 Why?
0:10:16 ‘Cause they know how mendacious this shit is.
0:10:18 This is about money and nothing else.
0:10:21 Do you really think they care about your kids’ free speech
0:10:24 or ensuring that the LGBTQ community has a chance
0:10:26 to reach out and find other kids?
0:10:29 Yeah, this is not perfect legislation,
0:10:32 but on the whole, on the whole stop signs have a downside.
0:10:34 But they still make a lot of sense.
0:10:37 I don’t doubt that there are probably three or four,
0:10:39 I don’t know, or instances of people
0:10:42 that had a terrible reaction to the vaccines.
0:10:43 I don’t doubt it.
0:10:44 And guess what?
0:10:47 It’s still hugely worth it.
0:10:49 This is just so unnatural that we’ve let this go on
0:10:50 for so long.
0:10:53 So kudos to Australia for trying to implement
0:10:54 and do something about it.
0:10:55 The legislation will be introduced
0:10:57 to the Australian Parliament this year.
0:10:59 And if approved, we’ll take effect 12 months later.
0:11:03 And again, for those of you who are thinking about academia
0:11:05 or don’t think a book can change the world,
0:11:07 they are banning phones in countries
0:11:10 because of a book called “The Anxious Generation”
0:11:12 by Professor Jonathan Hyde.
0:11:13 Also a lovely guy.
0:11:14 He’s a lovely guy.
0:11:17 Anyways, thanks for the question.
0:11:19 We have one quick break before our final question.
0:11:19 Stay with us.
0:11:25 Support for Prophecy comes from Mint Mobile.
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0:14:37 Welcome back, question number three.
0:14:39 – Hi Scott, my name is Molly Stark-Dean.
0:14:42 I’m a huge fan and an NYU alumni.
0:14:44 I landed a new job at the new school,
0:14:46 teaching journalism in the machine.
0:14:50 I feel really comfortable talking to large groups of people,
0:14:53 but my class will be a small group of less than 20.
0:14:56 How do I change my mass communication styles
0:14:59 to accommodate the class size?
0:15:02 Are there any secrets to teaching and grading AI projects?
0:15:04 Any advice is welcome.
0:15:06 – I’ll take this in reverse order,
0:15:08 and thanks for the question, Molly, and congratulations.
0:15:10 I kind of fell into teaching.
0:15:11 Actually, that’s not true.
0:15:12 I knew I was the one who wanted to teach.
0:15:13 I was thinking about getting my own PhD,
0:15:14 and my mom got sick.
0:15:15 I kept a state and an MBA,
0:15:17 but I always wanted to go back to teaching,
0:15:19 but I find it very rewarding.
0:15:20 Basically, as a teacher at a university,
0:15:22 you just have to be sort of the best student in the class.
0:15:26 Some people are literally the expert in the domain.
0:15:27 Most of us aren’t.
0:15:30 We just do the reading and try and be very well-prepared
0:15:35 in class, but okay, so how to grade AI projects?
0:15:37 Shit, I don’t know.
0:15:39 What I can tell you is that I now have an eye
0:15:41 and can spot shit written by AI.
0:15:44 And I’ll circle it and say AI, question mark.
0:15:46 And when I say to my kids, my kids are,
0:15:47 the average is 28.
0:15:49 These are adults working at Google
0:15:51 and Salesforce and Bridgewater.
0:15:53 And I’m like, look, if you want to turn something in
0:15:56 and you want to be AI and not do any work, have at it.
0:15:59 But the whole point here is to learn some skills.
0:16:00 And generally speaking, it’s interesting.
0:16:03 I can actually now pick out AI-written material,
0:16:05 or at least I think I can.
0:16:07 What I can help you with is, all right,
0:16:09 if you’re blessed to have, I used to have,
0:16:12 when I first started, my classes were only 20 or 30 kids.
0:16:15 Word got out that it was a good class
0:16:17 and now my classes are 300.
0:16:19 What you have, or the advantage you have with 20 kids,
0:16:22 quite frankly, is the Socratic Method and Student Engagement.
0:16:25 And that is, you can get to know them.
0:16:28 And what you’re meant to do, I think the best classes are,
0:16:30 I taught three-hour sessions, was an hour
0:16:33 of actual content lecturing and then two hours
0:16:35 of critical thinking and debate.
0:16:37 And that is, I would say, okay, should Nike
0:16:39 take money out of advertising and open stores
0:16:40 and vertical distribution?
0:16:43 And I would say, Alan, please make an argument for this
0:16:46 as it relates to trends in modern day branding
0:16:48 about vertical distribution.
0:16:50 And then she’d get nervous and fumble over herself
0:16:52 and try and make a comment.
0:16:54 And then I’d say, okay, Joe, disagree with her
0:16:57 and show why she has this wrong.
0:16:59 And then he’d even make something less cogent,
0:17:01 but the class would have time to absorb the issue.
0:17:04 And I’d start calling on people and asking them not to argue,
0:17:07 but to thoughtfully debate, really come out,
0:17:09 come up with things, push back on them.
0:17:11 I’m not afraid to say, look,
0:17:13 that was really intelligent, what you said.
0:17:14 What you need to be able to do is say it
0:17:16 in a third of the time, ’cause it’ll be three times
0:17:18 as powerful, I’m gonna come back to it in 30 seconds.
0:17:21 My point is, you can really, I don’t wanna say
0:17:23 get in their face, but really get in their heads
0:17:26 and make it super engaged and create a little bit of tension
0:17:30 that they know you’re gonna call on them three or four times.
0:17:33 And that creates a level of intensity and excitement.
0:17:34 By the way, it’s not for everyone.
0:17:35 Some kids don’t like that.
0:17:37 I once had a kid come to my,
0:17:38 actually I’ve had it several times say,
0:17:40 I get very nervous, I’d rather you didn’t call on me.
0:17:43 And I said, I’m gonna continue to call on you,
0:17:46 but you can say, I need a minute or I don’t know,
0:17:48 and I’ll come back to you, and you’re in a safe place,
0:17:50 but you have to get past this.
0:17:53 It’s gonna be very hard to be successful economically
0:17:55 without the ability to speak in front of a,
0:17:57 at least a small group of people.
0:17:58 So anyways, play to your strengths,
0:18:01 a small group of people, really active conversation
0:18:03 with 20 kids.
0:18:06 If everyone hasn’t spoken at least once during the class,
0:18:06 you have failed.
0:18:08 You’re not as much a teacher as you are a maestro
0:18:11 for a really robust conversation,
0:18:13 but congratulations on your new role.
0:18:15 I think it’s very rewarding.
0:18:16 Thanks for the question.
0:18:18 That’s all for this episode.
0:18:20 If you’d like to submit a question,
0:18:23 please email a voice recording to officehours@proptimedia.com.
0:18:26 Again, that’s officehours@proptimedia.com.
0:18:28 (upbeat music)
0:18:36 This episode was produced by Jennifer Sanchez
0:18:37 and Caroline Shagren.
0:18:39 Drew Burroughs is our technical director.
0:18:40 Thank you for listening to the Property Pod
0:18:42 from the Vox Media Podcast Network.
0:18:43 We will catch you on Saturday
0:18:46 for No Mercy, No Malice, as read by George Hawn.
0:18:48 And please follow our Property Markets Pod
0:18:50 wherever you get your pods for new episodes
0:18:51 every Monday and Thursday.
0:18:56 The support for this episode comes from AWS.
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0:01:42 Welcome to Raging Moderates. I’m Scott Galloway.
0:01:43 And I’m Jessica Charlev.
0:01:45 Jess, where are you today?
0:01:48 At the same place I always am.
0:01:50 I’m at home in New York.
0:01:54 Yeah. Well, actually at the Vox studio, so I’m in the financial district.
0:01:57 Oh, you look nice here. I go there now.
0:01:57 Yeah, you’re a newbie.
0:02:02 You’re excited and ambitious to actually do the right things,
0:02:06 to haul down to what is arguably the most uninspiring part of Manhattan,
0:02:12 to where my guess is they’re paying Vox to occupy their office space.
0:02:16 But they are very nice studios, and it’s a lot of young people running around.
0:02:22 Yeah, I’m like middle-aged here, like 55 on a comparative basis.
0:02:25 Okay, you say that like it’s really old. You realize your podcast partner.
0:02:29 You said middle-aged, and we’re all going to, I don’t, middle-aged
0:02:31 isn’t really middle, right?
0:02:35 Yeah, I’ll be 55 in five years.
0:02:36 All right, so what are we going to talk about today?
0:02:39 Today we’re talking about Matt Gitz,
0:02:41 withdrawals from AG consideration, Gates Gitz.
0:02:45 I’m happy he’s like going into hopefully political oblivion just for that.
0:02:46 I can’t pronounce his name.
0:02:48 Something terrible is brewing, but yes.
0:02:52 That’s right. More Trump cabinet picks.
0:02:55 Great season episode two of Dancing with the Stars,
0:03:02 whether modern family or family guy, and the transgender bathroom ban in Capitol Hill.
0:03:04 Can’t believe we’re talking about this.
0:03:04 I know.
0:03:04 I can’t.
0:03:06 Anyways, here we are.
0:03:09 I love legislation that is focused on one person.
0:03:11 Yeah, it’s really fair.
0:03:12 Yeah, it’s nice.
0:03:14 It doesn’t get the game away.
0:03:15 It’s a good look.
0:03:18 But first, we want to remind you, that’s right, it’s that time in the show
0:03:22 to please follow our Raging Moderates podcast on your preferred platform.
0:03:23 Please follow us.
0:03:28 If you’re listening on Apple, we know that about a quarter of you aren’t subscribed.
0:03:29 So don’t be that person.
0:03:32 Hit the follow button so you never miss an episode.
0:03:36 We don’t, quite frankly, we don’t register in the rankings.
0:03:38 We don’t register in Google search.
0:03:41 And most importantly, we do not get paid
0:03:44 if we don’t have people actually subscribed to our feed.
0:03:48 So if you’re enjoying the show, please follow our Raging Moderates podcast
0:03:50 on your preferred platform.
0:03:51 All right, enough of that.
0:03:52 Thank you for enduring that.
0:03:54 What are we talking about?
0:03:58 Last week, Matt Getz lobbied hard on Capitol Hill for his confirmation.
0:04:00 But by Thursday morning, Trump apparently called to let him know
0:04:02 he didn’t have the votes in the Senate.
0:04:06 By the afternoon, Getz announced on social media this confirmation had become
0:04:10 a distraction from having sex with minors.
0:04:12 A few hours later, Trump announced his new pick.
0:04:15 Florida Attorney General Pam Bondi.
0:04:16 Is it Bondi?
0:04:16 Bondi?
0:04:17 Bonda?
0:04:18 Bondi.
0:04:18 Bondi?
0:04:19 She’s a Bondi girl.
0:04:20 Like a Bond girl.
0:04:25 Trump loyalist who has ties to Susie Wiles and Boris Efstein.
0:04:27 These people gotta get similar fucking names.
0:04:29 Boris is no bueno.
0:04:30 Yeah.
0:04:31 No, no bueno.
0:04:31 Okay, Jess.
0:04:35 You know, as always, you’re going to have to carry this show.
0:04:39 What does this signal that there’s, is there a limit?
0:04:42 Is there an actual limit in the Trump administration?
0:04:44 Would Getz actually cross the line here?
0:04:49 I guess that that’s a peachy read of all of this.
0:04:51 Though, I mean, we were, when we were talking about it last week,
0:04:55 the expectation was that this one wasn’t going to get through.
0:04:58 Especially once they’re started being like the jockeying back and forth about
0:05:01 whether they’re going to release the ethics report.
0:05:04 And then Trump apparently, the transition team doesn’t want
0:05:08 anyone to undergo normal FBI checks, which is the usual procedure.
0:05:10 They’re like, we can do it with an outside firm.
0:05:13 So I can hire, you know, Baron to look at them.
0:05:15 And then we’ll, we’ll see what’s going on.
0:05:19 But I never think it’s as straightforward as it seems.
0:05:24 I feel like the fact that Matt Gaetz said, I am not taking my seat.
0:05:28 So he won reelection and he could still, even though he resigned from Congress,
0:05:30 he resigned from this Congress, not the next one.
0:05:33 So the expectation was, well, maybe he’s just going to go back to Congress,
0:05:36 which would also help Mike Johnson out that he doesn’t have to have
0:05:41 a few months down one further in his majority because they can only lose,
0:05:46 you know, one to three votes per issue as it is.
0:05:48 But then he says, I’m not going back to Congress.
0:05:52 And that makes me think, like, what terrible thing are you going to do?
0:05:58 You know, he said, there are already people that I know have a hardened position.
0:06:01 No, to me, Mitch McConnell, Susan Collins, Lisa Murkowski,
0:06:05 and then John Curtis, who will be the new senator from Utah, replacing Mitt Romney.
0:06:13 And it made me think, are the other controversial picks not getting that kind of feedback?
0:06:19 Or is Matt Gaetz the only one who doesn’t want to go through this public airing of anything?
0:06:22 Because I imagine that there are a few that are telling Pete Hegseth,
0:06:29 I’m not into you, or RFK Jr. So what do you think?
0:06:34 I listened to the Daily Podcast and they were talking about Gaetz.
0:06:37 And basically, the reporter had done some work where he had found
0:06:42 some of the evidence that was going to be included in the ethics report that the
0:06:46 Republicans managed to squelch, saying that it should not come out now that he’s no longer
0:06:50 a member of Congress, which makes absolutely no sense to me.
0:06:53 Let’s spend a bunch of time looking at a report.
0:06:58 And if Gaetz claims or is innocent as he claims, then I would imagine that the report
0:07:01 would state that, that he would want the report to come out.
0:07:03 This is the thing that absolutely strikes me.
0:07:08 He wasn’t worried about people finding out that there was evidence that he was having
0:07:09 sex with minors.
0:07:11 He wasn’t worried about what people would think about him.
0:07:16 He wasn’t worried about his inability to be America’s top cop with this type of cloud.
0:07:18 He was just worried he wasn’t going to get the votes.
0:07:26 In my view, this really represents a new low that we have a government and we have people
0:07:29 who would even entertain this type of nomination.
0:07:33 I just, I don’t think I’ve ever seen anything like this.
0:07:34 And I’m not a historian.
0:07:40 I’m trying to think of the last time there was a nomination that was just brazenly inappropriate,
0:07:47 stupid, and insulting to America in this general notion that when we elect people,
0:07:54 and they have the power of putting people in power, that there is some fidelity to decency,
0:07:59 to the constitution, to the actual goddamn job description.
0:08:05 We just seem to be setting new lows every damn day.
0:08:07 Anyways, that’s my ranch, yes.
0:08:11 I think the problem is, is that the top of the ticket is what,
0:08:16 or I should say who shattered a lot of these norms to begin with.
0:08:19 So why wouldn’t the cabinet follow suit on that front?
0:08:25 And there were all of these stories coming out about past nominees that hadn’t been able
0:08:30 to get through under Bill Clinton because they had an undocumented nanny.
0:08:36 Like those were the days, right, when you just had someone who was, yes, here illegally,
0:08:41 but was good enough to be taking care of your child, which is probably the most important job
0:08:43 that we have globally speaking.
0:08:49 There’s nothing more precious than your child and who you entrust them to be with for 10 hours
0:08:50 a day or whatever you’re doing.
0:08:53 And that was ending nominations.
0:08:58 And now we’re having conversations about how many minors is too many,
0:09:03 or how many allegations of sexual assault is too many, how many brainworms,
0:09:10 how many affairs and sex journals that ended up leading to suicides is too many.
0:09:15 And I don’t know, it makes me think a lot about what the Democrats are going to have to do.
0:09:21 And this is one of the cases that people have been making, not because he behaves like this,
0:09:25 but because he has this kind of swagger for a Gavin Newsom.
0:09:29 You know, there’s this whole part of social media that talks about him as the psychopath
0:09:30 we need, right?
0:09:36 Like the guy who will just show up as relentlessly on message is fast,
0:09:39 on his feet is so good looking, is so sharp.
0:09:42 And I think there are going to be a lot of people that feel that way,
0:09:48 that are going to feel scared away from a kind of more normie pic, right?
0:09:52 Like a guy who’s just standing up there with his nice wife and his two kids,
0:09:55 and doesn’t have that kind of energy.
0:10:02 Because it’s clear the Republican Party is feeding off of depravity at this point.
0:10:05 Let’s talk about Pam, new AG probably.
0:10:09 She comes across as fucking Thurgood Marshall right now.
0:10:10 In my sense, she’s going to sell right through.
0:10:11 What are your thoughts?
0:10:13 I think she will as well.
0:10:19 If there was some game of 3D chess going on to put Gates up to get someone else
0:10:24 in and a big sense of relief, this could have been it.
0:10:27 I think Pam Bondi is not going to have any issues,
0:10:28 as she was a prosecutor for a long time.
0:10:32 First female AG in Florida, very, very competent.
0:10:37 She’s been in a lobbying firm called Ballard for the last several years.
0:10:39 And Susie Wiles is a partner there.
0:10:41 So she’s a very good relationship with Susie Wiles,
0:10:44 which is obviously a big part of this.
0:10:49 She has ingratiated herself to Trump over the last 10-plus years.
0:10:52 So in 2016, she actually endorsed Trump over Marco Rubio,
0:10:57 which was a big deal that the Florida AG went for Trump versus the hometown hero,
0:10:59 though I guess Mar-a-Lago has been in Florida.
0:11:04 The only, well, two things that I think are relevant.
0:11:10 So she’s very into this same line of argumentation that Gates was making,
0:11:13 which is I’m going to investigate the investigators.
0:11:16 I’m going to weed out all of the bad guys, get rid of Jack Smith, his whole team.
0:11:17 She’s been talking like that.
0:11:21 She actually went for Trump’s claims of voter fraud in 2020.
0:11:24 She even went to Philadelphia and gave a press conference
0:11:26 about how messed up everything was going,
0:11:29 the false claims of widespread voter fraud.
0:11:37 The one kind of scandal, I guess, revolves around a 2013 political donation.
0:11:41 So that’s when that huge lawsuit investigating Trump University was going on,
0:11:44 and all the state AGs had to sign on.
0:11:47 And there were a lot of victims from Trump University in Florida,
0:11:51 and Pam Bondi ended up not signing on,
0:11:56 and also got a $25,000 contribution from Trump’s charity.
0:12:02 So that will, I think, be the kind of fireworks in terms of the scandals,
0:12:04 I guess, in her hearings.
0:12:07 And the more normy Republicans, I think, will want to hear,
0:12:11 you’re not just going to come in and do everything that he wants,
0:12:17 especially considering the Supreme Court ruling about immunity for kind of everything.
0:12:20 But in general, this looks like it’s going to be absolutely fine.
0:12:24 And just with going back to Gates, let’s be clear,
0:12:28 Democrats have had their own struggles with scandal, and especially around,
0:12:33 it used to be that Republicans stole and Democrats had affairs.
0:12:35 Now just everybody’s doing everything it feels like.
0:12:41 But infidelity, weirdness, scandal,
0:12:43 that is not sequestered to the Republican Party.
0:12:52 But I do think it’s important that we discern between scandal and real criminal activity,
0:12:54 such as having sex with minors.
0:12:56 And I got to believe that that report,
0:12:59 I can’t believe it hasn’t been leaked, was pretty damning, but–
0:13:01 It’ll get it.
0:13:01 It’ll be out.
0:13:02 You think so?
0:13:02 I’m sure.
0:13:06 Yeah, Susan Wilde, the Democrat, the ranking Democrat on the committee,
0:13:07 has said as much.
0:13:10 She was really upset that Republicans were leaking
0:13:14 inside information from what was going on in the room.
0:13:17 I think that they’re going to get it out.
0:13:19 And I think that’s probably why Gates thought,
0:13:23 I got to get out of here, because I’m not going to be insulated from this.
0:13:27 One thing we haven’t talked about, which is so central to all of this,
0:13:30 and then I do want to get to other nominees.
0:13:34 But he’s picking everyone who’s good on TV.
0:13:39 And Pam Bondi has spent a lot of time on our airwaves on Fox.
0:13:44 But when you think about it, it’s actually really smart.
0:13:48 If you can get qualified people who are all so good on TV,
0:13:51 that they can defend themselves and that they can defend you
0:13:54 and not look like a deer in headlights every time they give an interview.
0:13:57 So a lot of people are dismissive of it,
0:13:58 but I think it’s actually a very good strategy.
0:14:02 Hmm, says one of the co-hosts of the five.
0:14:03 Okay, yeah.
0:14:06 Well, I’m not getting picked for anything, but I’m just saying.
0:14:07 Are you kidding?
0:14:11 You look like Hillary Clinton at this point.
0:14:12 You would be the least,
0:14:15 you would be the most qualified pick in the cabinet right now.
0:14:21 I mean, yeah, I don’t, you would look like Lloyd Benson with better hair.
0:14:26 Anyway, on that note, let’s take a quick break, stay with us.
0:14:31 [MUSIC]
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0:16:43 Okay, Jess, a few more cabinet announcements we’re discussing.
0:16:46 Howard Letnick was tapped as Commerce Secretary,
0:16:49 and Scott Passent was picked as Treasury Secretary,
0:16:51 which the market’s like.
0:16:53 Lynn McMahon, a long time ally and donor,
0:16:54 was named to lead the Department of Education.
0:16:57 McMahon’s background is light on education policy.
0:16:59 Okay, as if that matters.
0:17:04 And she also co-founded the World Wrestling Entertainment Federation
0:17:05 with her husband.
0:17:08 Is it world wrestling entertainment, I think?
0:17:12 Anyways, and the most surprising pick, Dr. Oz,
0:17:14 as the head of the Centers for Medicare and Medicaid Services.
0:17:17 What are your thoughts on these picks?
0:17:19 Up and down, I guess.
0:17:22 Linda McMahon, that’s a tough one.
0:17:23 She was in the first administration.
0:17:26 She was definitely going to be somewhere here.
0:17:28 She lied about having an education degree,
0:17:31 which I feel like is a big lie if you’re gonna go be
0:17:35 the head of the Department of Education,
0:17:36 essential education secretary.
0:17:40 We should also note, there have been a number of lawsuits
0:17:43 over the years, but there’s even an open civil suit
0:17:47 against the WWE that these abuse scandals,
0:17:49 involving boys as young as 12 years old,
0:17:51 that the McMahon’s hired people,
0:17:56 one guy in particular, who they knew allegedly was an abuser.
0:17:59 And I didn’t do anything to stop it.
0:18:01 They call it the “ring boy” scandal.
0:18:05 But, you know, abolishing the Department of Education
0:18:06 is their talking point.
0:18:08 And one other thing I’ll be doing very early
0:18:11 in the administration is closing up the Department of Education
0:18:16 in Washington, D.C., and sending all education
0:18:19 and education work and needs back to the states.
0:18:23 We want them to run the education of our children
0:18:25 because they’ll do a much better job of it.
0:18:27 You can’t do worse.
0:18:31 We spend more money per pupil by three times
0:18:32 than any other nation.
0:18:36 And yet, we’re absolutely at the bottom.
0:18:37 We’re one of the worst.
0:18:39 I’m not sure that that happens.
0:18:42 You need 60-plus votes to be able to do it.
0:18:46 But what I think that they are going to try to do,
0:18:49 and it sends a really important signal across the country,
0:18:51 and also to teachers’ unions,
0:18:56 is to talk more about school choice and vouchers.
0:18:59 And there are a lot of people, even on the Democratic side,
0:19:02 who are so disappointed in the quality
0:19:05 of our public education and for good reasons.
0:19:07 We just keep falling further and further behind.
0:19:10 Public schools really let American students,
0:19:11 especially American students,
0:19:14 who are poorer down during COVID,
0:19:17 but not letting them back in the classroom,
0:19:20 even though we knew that kids were not transferring,
0:19:22 generally speaking, COVID to one another,
0:19:23 and that it would have been safe
0:19:25 because teachers didn’t want to come in.
0:19:27 And you see Democrats like Josh Shapiro,
0:19:31 the governor of Pennsylvania, has supported vouchers.
0:19:34 I think that that is the way of the future,
0:19:37 and that Democrats are going to really need to reckon with this.
0:19:41 And Linda McMahon will be the face of pushing that forward.
0:19:44 I don’t think there’s any getting around it.
0:19:51 They need a reformer, but this whole doja over reductives
0:19:54 thinking of let’s just get rid of the Department of Education,
0:19:56 just burn it, burn the village to save it.
0:20:00 There are a few investments, maybe outside of R&D
0:20:01 or some science programs,
0:20:04 that show that are technically investments.
0:20:05 Social security is a cost.
0:20:08 We’ve decided to tax young people,
0:20:10 to transfer money to older people,
0:20:14 to eliminate or attempt to eliminate senior poverty.
0:20:15 And it has largely worked.
0:20:17 I would argue it’s become too expensive,
0:20:19 and now seniors are the wealthiest generation
0:20:19 in the history of the planet.
0:20:21 There should be means testing.
0:20:22 It should be pushed back.
0:20:25 It used to be when social security was first invented,
0:20:26 80% of the people would never get it
0:20:27 because they would die now.
0:20:29 Now more than 80% get it.
0:20:32 And it used to be 12 to one people of your age
0:20:33 supporting people of my age.
0:20:35 Now it’s three to one.
0:20:38 Anyways, that is a cost.
0:20:39 Department of Education is an investment.
0:20:41 And you might argue that the investment
0:20:43 is not getting the ROI it deserves
0:20:45 because it is poorly allocated.
0:20:47 And I agree with you around school choice,
0:20:49 competition works.
0:20:52 There are some teachers as someone who went through
0:20:55 public schools all the way through graduate school.
0:20:58 I remember certain components of my education,
0:21:00 Emerson Junior High School.
0:21:01 They were just warehousing us.
0:21:04 There was 35 kids per class.
0:21:08 I was there with the first year they integrated the school.
0:21:11 So all of a sudden out of the school, 1,500 kids,
0:21:13 600 black kids from Compton showed up
0:21:15 after being on a bus for an hour.
0:21:16 They were pissed off.
0:21:19 And it wasn’t a Hallmark movie.
0:21:20 We all hated each other.
0:21:21 Get this, Jess.
0:21:24 We used to have black against white softball games.
0:21:25 And the faculty allowed that.
0:21:26 Seriously?
0:21:27 Oh yeah, we hated each other.
0:21:28 Absolutely.
0:21:30 It was everything integration was not supposed to be.
0:21:31 That’s the bad news.
0:21:34 The good news was that by high school,
0:21:36 something wonderful happened and we were all getting along.
0:21:39 My two best friends were one was a Mormon kid
0:21:40 who ended up going to Stanford.
0:21:44 And the other was a black kid who got a football scholarship
0:21:48 to Linfield, I think a university in Oregon
0:21:51 who lived in Baldwin Hills and his father was a minister.
0:21:53 I mean, these two kids couldn’t have been more different
0:21:55 except they were both really good kids.
0:21:56 They were actually great role models for me.
0:22:01 But anyways, my point is it was absolutely awful.
0:22:03 And I remember the teachers were so overwhelmed
0:22:04 just trying to keep a lid.
0:22:10 35 kids, sometimes 38 kids per class and all my friends,
0:22:13 my nice white friends, quote unquote, air quotes,
0:22:15 their parents pulled them out of school immediately
0:22:17 when integration started and stuck them
0:22:20 in this hippie-dippy private school called Windward.
0:22:23 And I remember it was one of the first moments where I thought,
0:22:25 “Oh, things are different for me and my mom.”
0:22:27 Because I went home and said, “Oh, I need to go to Windward.”
0:22:29 And she was like, “Sit down, we don’t go to private schools.”
0:22:30 We need to talk.
0:22:30 Yeah.
0:22:35 And but the Department of Education, in addition to Title I,
0:22:37 I think it’s Title I, where they ensure that schools
0:22:39 in rural, poor areas get the funding they need
0:22:40 to deliver an adequate education,
0:22:42 they also are responsible for a head start.
0:22:46 And they also, I’m here with you now
0:22:48 because the Department of Education
0:22:49 is specifically Pell Grants.
0:22:52 And that is Pell Grants, basically,
0:22:54 if you’re in the lower third of income earning homes,
0:22:57 you get free, you know, you get money, not even loans,
0:22:58 which also the student loans,
0:23:00 the Department of Education overseas,
0:23:02 which I believe you need drastically reforming,
0:23:03 and I’ll come back to that.
0:23:07 But I could not have gone to UCLA without Pell Grants.
0:23:08 And this makes my point,
0:23:10 while also giving me the chance to do my favorite thing,
0:23:13 and that is boast, I pay a lot of taxes.
0:23:18 So these Pell Grants are an investment that pay off.
0:23:21 I think if you, I think there are a few things
0:23:23 that you could look at and think,
0:23:25 a dollar invested in education well delivered,
0:23:27 I’m not saying there isn’t reform that’s required.
0:23:30 Not only gets you additional incremental income
0:23:33 because you can occasionally produce people
0:23:35 who do really interesting things,
0:23:36 go into teaching themselves,
0:23:38 start businesses, create tax revenue,
0:23:41 but you avoid a lot of costs
0:23:43 because without an educational system,
0:23:47 you’re gonna end up paying for these folks one way or another,
0:23:49 whether it’s your incarceration, mental health, homelessness,
0:23:53 welfare, food stamps, unemployment.
0:23:55 So the Department of Education is arguably
0:23:59 the place where you’re gonna get the greatest return
0:24:01 on your investment if it’s handled well.
0:24:06 And it’s just, it’s sort of, it sort of is depressing.
0:24:09 Although, I guess you could argue her background.
0:24:11 She was, I believe, head of the Small Business Administration.
0:24:15 So maybe, I mean, she strikes me as a competent woman.
0:24:17 She’s the least or one of the least bad picks,
0:24:20 but I wish they would stop this bullshit notion
0:24:22 that we’re just gonna get rid of the Department of Education.
0:24:24 And what’s interesting, or I find interesting,
0:24:27 I interviewed a guy named Roy Stewart,
0:24:29 who’s the co-host of The Rest’s Politics,
0:24:31 which is, he was a former member of parliament,
0:24:35 really bright guy, was actually the tutor,
0:24:37 the private tutor for Princess Harry and William.
0:24:41 And he said, when they look at America,
0:24:42 when Brits look at America,
0:24:44 they can’t quite figure out the following.
0:24:47 And that is, we absolutely under-prioritize
0:24:49 and don’t talk about K-12 education.
0:24:52 And we have some of the worst K-12 education
0:24:55 in the world of the G7.
0:24:57 But at the same time, we have amazing graduate schools.
0:24:57 And at the same time,
0:25:00 we keep figuring out a way to grow the economy.
0:25:03 And he acknowledged that maybe that’s the way the economy,
0:25:05 the natural order of an economy is.
0:25:08 You have shitty schools, and it’s like a hunger games,
0:25:09 and then they get to go to the best universities.
0:25:14 And that struck me as a very upsetting rubric,
0:25:16 or lens through which to look at education.
0:25:18 But maybe that’s, because we just,
0:25:18 there’s no doubt about it.
0:25:20 K-12, we’re awful,
0:25:22 and yet our economy continues to grow like crazy.
0:25:25 But anyways, your thoughts on the Department of Education?
0:25:27 I think it’s important.
0:25:32 And I hate, you know, whether doge is effective or not.
0:25:36 The sweeping talking points about doing away with things
0:25:39 that need help or need tender loving care
0:25:43 is silly and reflects poorly upon you.
0:25:45 And it’s not how people run their businesses either.
0:25:47 You know, I understand Elon came in
0:25:49 and ran Twitter a bit like that,
0:25:50 but they’ve been losing a lot of money,
0:25:53 even though now it’s a bastion for free speech slash
0:25:55 the worst place I’ve ever hung out in my life.
0:26:01 And it reflects a lack of seriousness about this
0:26:05 and a lack of care and concern for your core constituency.
0:26:06 Because guess what?
0:26:08 A lot of people who don’t make a ton of money
0:26:09 voted for Donald Trump.
0:26:10 And guess what?
0:26:12 They use the public school system.
0:26:16 They don’t have other options to go to a private school.
0:26:19 The lottery system for getting into charters,
0:26:22 you know, might not get lucky and get to do that.
0:26:26 And so I think that they would be a lot more convincing
0:26:31 as serious folks if they took a different line of argumentation
0:26:34 about what they’re going to do with the Department of Education,
0:26:38 including making sure that people do have access to vouchers
0:26:40 in more circumstances.
0:26:41 I think that that is important
0:26:43 and you should be able to give people those options,
0:26:45 certainly with religious schools.
0:26:46 Because, you know, Catholic school
0:26:47 stayed open through the entire pandemic.
0:26:49 That was something that they had going for them.
0:26:51 And I understand why people want that.
0:26:56 There’s an aspect also to what McMahon will be overseeing.
0:26:57 And Trump’s been–
0:26:58 he talked about this throughout the campaign.
0:27:01 And I do think it is important.
0:27:05 So, you know, they could essentially transfer responsibility
0:27:08 for accrediting universities to college–
0:27:10 for colleges to the states.
0:27:12 And Trump has been talking about things like,
0:27:18 if your university isn’t letting Jewish kids go to class
0:27:21 or get into the dining hall or get to the Halal
0:27:24 or the Habad on campus, we’re coming after you.
0:27:28 And I don’t think that that’s necessarily a bad thing
0:27:30 to be tinkering around with that
0:27:32 or to at least be using it as a threat.
0:27:34 They, you know, they’ve also said as a cudgel,
0:27:36 you know, if you have DEI policies
0:27:37 or if you’re using affirmative action.
0:27:39 And the universities are smart enough
0:27:42 that they can get to whatever form of affirmative action
0:27:46 they think they need to without it sending up flags in that way.
0:27:48 But what do you think about the approach
0:27:50 of threatening these universities more
0:27:53 if they are not treating each student as equal?
0:27:56 Like, if they’re not treating kids from one group
0:27:58 like they would if they were black, for instance,
0:28:00 or if they were LGBTQ+?
0:28:02 Well, look, I said this early on.
0:28:08 If I went to Royce Hall or the Quad near Royce Hall, UCLA,
0:28:13 or I went down to my universities in front of my building at NYU,
0:28:18 and I started, I held up a Confederate flag
0:28:20 and I passed out bans to white kids
0:28:24 and the kids without bans couldn’t enter the university.
0:28:27 They would have called in the fucking National Guard.
0:28:32 But I mean, what was clear coming out of this zombie apocalypse
0:28:35 of useful idiots on campus, free speech is never freer
0:28:37 when it’s hate speech against Jews.
0:28:41 And this was a really low moment for universities.
0:28:45 And I advise the regents of the University of California
0:28:47 and we did a couple calls over the summer and said,
0:28:49 “Okay, they were very worried about fall.
0:28:51 What happens if this flares up again?”
0:28:53 And I thought the solution was pretty easy.
0:28:57 If there are students who are protesting
0:28:59 or putting up anything resembling an encampment
0:29:03 and it turns to hate speech or they try and build…
0:29:04 I mean, basically they tried to build a mini,
0:29:08 you know, a mini city, if you will.
0:29:09 They were trespassing.
0:29:12 You ask them to clear the area, you get them 15 minutes,
0:29:14 you warn them they will be punished.
0:29:18 I mean, you expel the first six or 12 students to violate this
0:29:21 and when word gets out that shit just got real
0:29:22 and you may have to call your folks and say,
0:29:25 “Hey, mom, dad, you’re spending $50,000 a year for me
0:29:27 to get expelled for hate speech.
0:29:29 This will stop right away.”
0:29:32 And then the thing that didn’t get much press
0:29:33 that I have no tolerance for
0:29:37 is I think you cut a 19-year-old a pretty wide berth.
0:29:39 You’re supposed to be stupid when you’re 19
0:29:42 and sometimes that stupidity moves society forward.
0:29:46 Whether it was the protests on campus against Vietnam or Iraq,
0:29:48 you know, sometimes kids are meant to push the boundaries
0:29:51 and sometimes they’re thinking more forward
0:29:54 and more correctly than, you know, their parents.
0:29:55 You cut them a wide berth,
0:29:58 who I think should have absolutely been summarily fired
0:30:01 with a faculty that showed any empathy
0:30:03 for this genocidal death cult.
0:30:06 And there are still faculty at the University of California
0:30:10 who put out exceptionally vile tweets,
0:30:14 said they were inspired by the activities of October 7th.
0:30:17 You are still shown up at the Faculty Cafeteria
0:30:20 and most of them, it ends up, can’t teach the way
0:30:22 out of a paper bag and do a relevant research,
0:30:23 but are in this ridiculous guild
0:30:25 that is nothing but student debt called tenure.
0:30:29 So there not only needs to be reform up and down,
0:30:31 you know, in K-12.
0:30:34 There needs to be reform in schools.
0:30:36 And specifically the first place I would start
0:30:38 is that all universities should be on the hook
0:30:41 for a quarter or a third of student, bad student loan debt.
0:30:44 Because what’s really mendacious about my industry
0:30:46 is a really good kid shows up
0:30:48 and he meets with a woman who’s in a nice pants suit
0:30:49 who has a big college logo behind her
0:30:51 and she says some bullshit like this.
0:30:54 Education is an investment in yourself.
0:30:59 Here sign this paperwork for $50, $100, $200,000 in student loans.
0:31:01 And then the kid, like many kids, finds out
0:31:03 that he or she is not cut out for college,
0:31:07 leaves without a certification of college
0:31:09 that gets to keep that debt.
0:31:11 And it haunts this person the rest of their life.
0:31:14 The most dischargeable form of debt in history
0:31:16 should be student loans.
0:31:20 And instead, because my colleagues wake up
0:31:21 every morning and ask themselves,
0:31:23 how do I reduce my accountability
0:31:24 or increase my compensation?
0:31:26 I’ll access cheap credit.
0:31:30 And if I don’t deliver on my promise
0:31:32 and the kid gets nothing for the money
0:31:33 that’s been lent to them,
0:31:34 I’m not on the hook for it.
0:31:37 So if you put colleges on the hook
0:31:40 for 10, 20, 30% of bad student debt,
0:31:42 they’d stop loaning someone,
0:31:44 getting a fucking philosophy degree
0:31:46 from Joey Baggedon at its university
0:31:47 to go be a barista.
0:31:50 So my industry needs radical reform,
0:31:51 but the notion that you’re going to get rid
0:31:53 of the department of education
0:31:56 is again another key theme in what appears to be
0:31:58 both parties are guilty of it.
0:32:00 Let’s optimize America for the top 10%
0:32:02 at the cost of the bottom 90.
0:32:04 The top 10%, they’re right,
0:32:05 doesn’t need the department of education.
0:32:07 My kids don’t need the department of education.
0:32:08 They won’t benefit from it.
0:32:10 It’s the other 90.
0:32:13 And just looking at it purely economically,
0:32:14 it’s an investment that saves money.
0:32:17 I just wanted to really quickly,
0:32:19 can we just talk about Dr. Oz
0:32:22 and Dr. Jeanette Neshwat for one second?
0:32:23 Yeah, go ahead.
0:32:25 So Dr. Oz,
0:32:27 as the head of the Centers for Medicare and Medicaid,
0:32:31 it’s laughable in the TV doctor sense
0:32:33 and all the fad diets and all the quackery.
0:32:34 I thought it was hilarious.
0:32:35 There was a peer reviewed piece
0:32:37 in a British medical journal
0:32:39 that picked 40 random episodes of his show
0:32:41 and found that his health recommendations
0:32:43 were based on evidence just 46% of the time,
0:32:45 which is pretty shitty for a doctor.
0:32:49 But what he does plan to do that is really dangerous
0:32:52 is to work towards privatizing Medicare,
0:32:54 to move us towards Medicare advantage,
0:32:57 which is what mostly people who are 80 plus are on,
0:33:01 and the costs are enormous when you use Medicare advantage.
0:33:05 And he has talked about bringing that to younger Medicare users,
0:33:08 66 million people on Medicare,
0:33:09 including my mother and my dad.
0:33:12 It saw him through cancer, most unbelievable coverage.
0:33:15 Do you have any Dr. Oz feelings?
0:33:16 Yeah, so I have a bias.
0:33:23 I’ve been friends with Mehmet and Lisa Oz for 25 years.
0:33:25 And I find Mehmet to be-
0:33:25 We got some bias.
0:33:26 Yeah, it’s a huge bias.
0:33:27 I’m gonna disclose it.
0:33:29 In that time though, and I know him well,
0:33:32 and I knew him before, I mean, I know him in just a variety.
0:33:36 He was literally taking hearts out of cadavers
0:33:37 and putting them into other people.
0:33:39 He’s a cardiothoracic transplant surgeon.
0:33:42 And he’s a real dude.
0:33:45 And what I would say about Mehmet,
0:33:47 we don’t share political views,
0:33:49 but I’ve decided to separate the person from the politics.
0:33:51 And this person is a really good man.
0:33:56 And when he was contemplating positions like this,
0:34:00 when he was running for Senate, he’s really thoughtful.
0:34:01 And he knows we have different politics.
0:34:03 And so he would call me and ask me for my view on things.
0:34:06 And I say that because it makes me feel important.
0:34:09 But also it reflects well on him.
0:34:11 Mehmet is a high character person.
0:34:17 And I know he got a lot of grief for not respecting the science
0:34:19 around some of these supplements
0:34:20 and how blueberries can save your life.
0:34:22 He got blowback that he deserved for that.
0:34:24 But this is a good man.
0:34:26 And you want to talk about some of the bullshit around gets
0:34:30 and infidelity, he’s been married for I think close to 40 years.
0:34:31 Wonderful father.
0:34:33 And the first thing he did when he got this,
0:34:33 I congratulated him.
0:34:36 And he called me and said, “Give me your views on social security.”
0:34:40 He really wants to get to go deep here
0:34:43 and really try and be thoughtful and helpful.
0:34:47 So I’m a huge fan of Dr. Oz as a man.
0:34:48 He’s a good man.
0:34:51 Okay. I’m good with that.
0:34:52 And then someone who you may not know,
0:34:56 but I know personally because we have nine Fox personalities
0:34:59 that are going to go into the administration thus far
0:35:01 is Dr. Jeanette Neshwat.
0:35:03 And I wanted to mention this.
0:35:04 She’s a surgeon general.
0:35:06 She’s a real deal doctor.
0:35:11 And you can see that she’s being taken apart online
0:35:15 for believing in vaccines, for participating in…
0:35:17 You remember those like hand washing trends
0:35:19 where doctors were like doing TikToks and stuff
0:35:22 of how to make sure that you keep your hands clean.
0:35:25 She has called vaccine safe and effective.
0:35:26 It will keep you off the ventilator,
0:35:28 keep you from passing away.
0:35:31 And not only do I just like her personally,
0:35:33 but I hope that this is a signal.
0:35:36 And Dr. Marty McCary as well, who’s at Johns Hopkins,
0:35:37 who’s coming in for the FDA,
0:35:40 that there will be some hard science people in there.
0:35:43 They’re calling her Dr. Fauci and heels.
0:35:45 I am thrilled with that.
0:35:47 It’s great that you brought that up.
0:35:49 And also just want to use that as an excuse
0:35:51 to recognize who I think has been
0:35:54 the most consequential surgeon general in history.
0:35:56 And that is surgeon general Vivek Murthy,
0:36:00 who brought up loneliness, who brought up young men.
0:36:02 This is someone who put out thoughtful research,
0:36:06 elevating the awareness around some really key issues,
0:36:08 brought up how the mental health struggles
0:36:09 of people with parents right now,
0:36:11 which directly relates to the fact
0:36:14 that we keep figuring out a way to vote in more seniors
0:36:17 who vote themselves more money such that I stay rich
0:36:18 at the expense of people your age
0:36:19 who are trying to get by with kids.
0:36:23 All right, Jess, we have one more quick break.
0:36:24 Stay with us.
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0:38:03 Welcome back.
0:38:06 Over in the house, Congresswoman Nancy Mace
0:38:08 introduced a resolution to ban trans women
0:38:09 from using women’s restrooms
0:38:10 and locker rooms on Capitol grounds.
0:38:12 Thank God for Representative Mace.
0:38:15 Thank God, specifically targeting incoming
0:38:17 Congresswoman Sarah McBride.
0:38:21 This is a shiffer Mace who once supported LGBTQ rights.
0:38:23 Speaker Mike Johnson supported Mace
0:38:25 emphasizing single sex facilities.
0:38:28 McBride responded saying she’s focused on lowering costs
0:38:30 for Delaware families, not bathroom debates.
0:38:34 And she hopes colleagues will see value in her work.
0:38:38 I didn’t run for the United States House of Representatives
0:38:41 to talk about what bathroom I use.
0:38:44 I didn’t run to talk about myself.
0:38:47 I ran to deliver for Delawareans.
0:38:53 And while Republicans in Congress seem focused on bathrooms
0:38:55 and trans people and specifically me,
0:38:58 I’m focused on rolling up my sleeves,
0:39:01 diving into the details, setting up my office,
0:39:04 and beginning the hard work of delivering for Delawareans
0:39:07 on the issues that I know keep them up at night.
0:39:10 So what do we think of Representative Mace?
0:39:12 Nancy Mace sucks.
0:39:13 She’s awful.
0:39:19 And she had so much promise when she came into Congress.
0:39:25 She seemed like she was part of the normie caucus.
0:39:29 She said, I’ll stand up to Trump when that’s the right thing to do.
0:39:32 I’ll always be on the side of South Carolinians.
0:39:37 And now she’s just high off of getting as many likes
0:39:39 and retweets as possible.
0:39:43 These videos that she’s posting are embarrassing for her.
0:39:46 And I don’t know who started saying it
0:39:48 during the first Trump administration,
0:39:50 but the cruelty is the point.
0:39:52 The cruelty is the point here.
0:39:54 You have been in Congress for a while.
0:39:58 If you were concerned about someone being in your bathroom,
0:39:59 you could have brought this up,
0:40:01 because there are people who come in and out of Congress.
0:40:02 This isn’t about there.
0:40:05 So the members have their own private bathrooms.
0:40:07 And I’m sure that Sarah McBride will be using that,
0:40:09 or there are gender-neutral restrooms.
0:40:12 But Nancy Mace showed no evidence that anyone was a threat.
0:40:16 No one’s been attacked, God forbid.
0:40:18 She hasn’t been made to be uncomfortable.
0:40:20 And she is herself a rape survivor.
0:40:22 And she talks about that regularly
0:40:24 and the implications of being sexually assaulted.
0:40:27 But I see no correlation to this,
0:40:29 except that you want to rile people up
0:40:30 and take advantage of, frankly,
0:40:34 the level of misinformation that’s out there about trans people.
0:40:37 And I wanted to mention this to you.
0:40:40 So you have had new survey work out
0:40:43 about how Americans overestimate the size of minority groups
0:40:45 and underestimate the size of majority groups.
0:40:49 They think there are 21 times more trans people in America
0:40:51 than there are, 27 times more Muslims,
0:40:56 15 times more Jews, and two more times immigrants.
0:40:58 So there’s this fallacy out there
0:41:00 that, you know, kids are going to school
0:41:02 and coming home with different junk,
0:41:04 that everyone that you pass on the street is a trans person.
0:41:06 And that’s someone like Sarah McBride,
0:41:09 who I think has been so magnanimous
0:41:13 and taken the high road to a level that I never could.
0:41:16 Is the threat in all of this?
0:41:18 It’s the same thing, though.
0:41:20 And it’s the same thing I would argue around gits.
0:41:24 And that is it feels as if I’d like to see two classes
0:41:26 that are mandatory or three.
0:41:28 I’d like to be secretary.
0:41:30 I’d be the most qualified secretary of education
0:41:32 and let me think, 18 months.
0:41:36 So effectively, there needs to be a class on adulting.
0:41:37 My kid can do integers,
0:41:40 but he doesn’t understand the interest rate on his credit card.
0:41:43 I think there needs to be part of an adulting class
0:41:45 to teach young people, especially young men,
0:41:47 how to express romantic interest
0:41:48 while making the other person feel safe.
0:41:51 In basic kind of life skills,
0:41:53 I’d like to see a class on communications
0:41:55 where it says, all right, storytelling,
0:41:56 you have to understand mediums
0:41:57 and how to communicate your ideas.
0:42:00 I’d also like a course in critical thinking
0:42:03 because there are different levels of mendacious fuckery.
0:42:07 Infidelity is one thing, all right?
0:42:10 Scandal or abusing, if you will,
0:42:13 or taking advantage of a White House intern.
0:42:13 That’s worse.
0:42:16 That’s worse, in my opinion,
0:42:22 than having sex or relationships outside of your marriage.
0:42:24 And then in an entirely different fucking universe
0:42:26 is having sex with minors.
0:42:28 These are not the same thing.
0:42:30 And the problem is the populace goes,
0:42:31 oh, it’s just scandal, it’s just scandal.
0:42:32 No, it’s not.
0:42:34 There is a difference.
0:42:37 And when people correctly say, in my view,
0:42:39 or I think it’s a point worth arguing,
0:42:42 that people born, I was born,
0:42:45 I didn’t have the height nor the body mass
0:42:48 to play collegiate-level basketball or football.
0:42:51 I was born with or without certain attributes
0:42:54 that disqualified me from playing certain sports.
0:42:56 I think there is a solid argument
0:42:57 that if you are born with a penis,
0:43:00 it disqualifies you from playing women’s sports
0:43:01 or girls’ sports.
0:43:05 I think that is a honest, thoughtful discussion
0:43:06 we should have.
0:43:10 Passing legislation that is meant to do nothing
0:43:12 but attempt to weirdly shame
0:43:14 or show how anti-trans you are
0:43:18 by saying to an elected member of Congress,
0:43:21 “You cannot use the same bathroom as me.”
0:43:25 It’s just that’s a different level of mendacious fuckery.
0:43:29 And my fear is there’s so many points of weirdness
0:43:30 coming out of DC
0:43:34 that they all get grouped into the same level of mendacious.
0:43:34 They’re not.
0:43:38 And kids need, and young adults and adults,
0:43:41 need to understand that your whole point
0:43:43 or our advantage of a species
0:43:46 is that we see different shades of gray.
0:43:48 And when they go, they turn very dark
0:43:49 or when they’re worth a discussion
0:43:53 or we should just have a gag reflex.
0:43:54 But this is my fear.
0:43:57 And that is we now live in an attention economy
0:44:00 and it doesn’t matter how stupid or how mean
0:44:03 the content is that created attention for you,
0:44:04 it pays off.
0:44:06 And that she is now a Republican,
0:44:09 a rising Republican star because she’s a leader.
0:44:13 You know, there’s parents out there
0:44:15 worried about their daughter being run over
0:44:18 on the field hockey field by someone born with a penis.
0:44:22 I think that is a tangible, legitimate concern.
0:44:25 But they’re saying, “Oh, Representative Mace,
0:44:27 she’s our woman.”
0:44:28 No, she’s not.
0:44:31 She’s a mendacious, weird woman
0:44:33 who is taking her precious capital
0:44:36 and resources to actually do good things for her district,
0:44:40 to just be blatantly hostile and mean towards an individual.
0:44:41 Your thoughts?
0:44:44 I agree with all of that.
0:44:47 And I think that it’s the beginning of potentially
0:44:51 having electoral consequences.
0:44:53 And this is what Democrats want, right?
0:44:57 They want Republicans to take the mask off essentially
0:45:00 and to expose themselves for being people
0:45:03 who live by the cruelty is the point.
0:45:05 And if you remember the North Carolina
0:45:07 bathroom bill controversy,
0:45:09 this did not go well for Republicans.
0:45:11 This is not their concerns.
0:45:15 Biological men in women’s sports is their concern.
0:45:18 That’s 70% of Americans think that Leah Thomas
0:45:22 had no business being in that pool with those girls
0:45:25 as a competitive swimmer.
0:45:30 But they don’t care about using the bathroom.
0:45:34 Now, there are some people who do.
0:45:34 I get that.
0:45:36 I see them in my Twitter feed.
0:45:37 Hello, I see you.
0:45:41 But in general, no one is concerned about Sarah McBride.
0:45:43 And you notice it’s only Marjorie Taylor-Green
0:45:45 that’s been running around screaming about this
0:45:47 alongside Nancy Mace.
0:45:50 And if that’s your wingwoman for something like this,
0:45:53 you know that you’re probably doing something wrong.
0:45:56 And people who worked in Nancy Mace’s office
0:45:59 are destroying her online over this
0:46:04 and saying there’s more to come about how terrible this woman is.
0:46:08 But I think it’s just so ugly and good on Sarah McBride
0:46:11 for being such a big person to be able to rise above.
0:46:16 I do think the Democrats invited some of this bullshit
0:46:21 by being so insane on some of these issues.
0:46:24 I go back to the the cycling race,
0:46:27 the women’s cycling race in North Carolina,
0:46:31 where a transgender woman, Austin Killips, who was 27,
0:46:36 basically finished five minutes before anyone else
0:46:39 on a 137-mile-long race.
0:46:41 And the woman who had been who had been born a woman
0:46:43 who had been training her whole life came in second.
0:46:44 She should have won it.
0:46:47 And then immediately the far left started talking about,
0:46:49 you know, all these very,
0:46:53 basically was scared to come out and say,
0:46:54 this is ridiculous.
0:46:56 This is insane.
0:46:59 What I didn’t get is where feminists were.
0:46:59 Let me get this.
0:47:01 Where does this all go?
0:47:05 If we allow this, it means that every dollar,
0:47:09 metal, and scholarship ends up only going to people
0:47:10 born with penises?
0:47:13 So where were the feminists?
0:47:14 I just didn’t get this.
0:47:16 Well, that was Martina Navratilova
0:47:19 has been screaming about this for a long time.
0:47:21 Like, and I mean, this is, there have been,
0:47:24 and I know Cara has spoken about this before as well.
0:47:28 I mean, there have been evolutions within the LGBTQ+
0:47:32 movement that have shoehorned out certain groups,
0:47:36 like OG groups, like gay men and lesbians,
0:47:39 and, you know, moved to a different place
0:47:41 than perhaps they didn’t think they were going.
0:47:45 And I think that not saying things that are common sense,
0:47:48 not reverting to the mean of,
0:47:50 does this make sense as part of the problem?
0:47:52 And maybe there is some truth to, you know,
0:47:53 I have colleagues who will say,
0:47:57 well, this is because you don’t think about competition
0:47:58 the same way that we do,
0:48:00 because you get participation trophies for everything
0:48:04 at your, you know, your little liberal schools or whatever.
0:48:07 And I think that if Kamala had come out,
0:48:09 and again, I think it was a fundamentals election,
0:48:11 couldn’t win against the inflation
0:48:13 and people’s feelings about the economy.
0:48:15 But if she had come out after that,
0:48:17 the Charlemagne ad was cut,
0:48:19 which was a trans ad, but also an economic ad, right?
0:48:22 Like our money, your tax dollars are going to something
0:48:25 that is niche and that you don’t approve of.
0:48:26 So just come out and say,
0:48:28 that is not the position of the Democratic party.
0:48:30 Maybe some of those late deciders
0:48:31 would have felt differently about us,
0:48:33 that we weren’t out of our minds,
0:48:34 whether that’s, you know,
0:48:36 because some of our loudest voices,
0:48:39 like John Oliver did a whole monologue about it
0:48:40 last weekend or two weeks ago,
0:48:42 and he’s gotten a lot of blowback.
0:48:44 Jen Psaki has spoken about it and said,
0:48:45 oh, well, what’s the big deal?
0:48:48 The big deal is it ruins competition.
0:48:50 And it’s not fair.
0:48:52 Like it can’t be both things,
0:48:55 that a man can’t be inherently scary
0:48:57 if you run into him in a dark alley
0:49:00 and also that it’s fine in competition
0:49:02 against biological women.
0:49:04 Like those two things contradict each other.
0:49:06 It’s almost as outrageous as the last thing
0:49:08 we’re going to start or finish with.
0:49:09 And that is, I got to be honest,
0:49:11 I find this really fun.
0:49:13 What do you think of this idea?
0:49:15 Elon Musk buying MSNBC.
0:49:18 Oh, why does that make me happy, Jess?
0:49:19 That makes me happy.
0:49:20 What do you think?
0:49:20 Really?
0:49:21 Yeah, I think it’d be fucking hilarious
0:49:24 to have Stephanie Ruhl and Rachel Maddow,
0:49:26 like every night, meet each other,
0:49:27 to smoke cigarettes and eat ice cream
0:49:29 and talk about Elon Musk being their new boss.
0:49:30 I find it funny.
0:49:32 But would they still be there?
0:49:34 Like, what are the implications of something like that?
0:49:35 The 70-year-old white women
0:49:37 got to find another show to listen to.
0:49:39 I think MSNBC is quickly becoming a role model.
0:49:39 Well, I think they’re doing that already,
0:49:41 which is the problem.
0:49:42 I mean, what is this spin-off,
0:49:44 and I realize you’ve been discussing it
0:49:47 in your other shows,
0:49:49 but what is the spin-off of this?
0:49:50 I mean, they’re calling it now
0:49:52 a well-funded startup.
0:49:55 What is the future of MSNBC?
0:49:56 All of these things are going to be rolled up
0:49:57 into a bad bank structure.
0:49:59 Comcast has started it.
0:50:00 These can be really good businesses.
0:50:01 They’re shrinking businesses,
0:50:03 but they spin off a ton of cash flow.
0:50:05 What you need is a different approach
0:50:07 where you cut costs faster than revenue growth.
0:50:08 They can still be really good businesses,
0:50:12 but this is the pivotal moment, in my opinion,
0:50:14 or as it relates to the intersection
0:50:15 between politics and media,
0:50:18 is that you’re going to see, I mean,
0:50:20 a really good show gets a million viewers
0:50:23 on MSNBC average age 70, mostly white women.
0:50:26 Those folks know what they buy,
0:50:27 know what they don’t buy,
0:50:28 and they know who they’re voting for
0:50:29 and who they’re not voting for.
0:50:31 So, advertisers and political campaigns
0:50:33 are going to take all of that money
0:50:35 and put it into yours truly,
0:50:37 into podcasts where the average age is 34.
0:50:38 It’s mostly male.
0:50:41 Those people are up for grads
0:50:43 because they’re more about the economy
0:50:46 and economics are a much more dynamic situation.
0:50:49 It kind of pings back Democrat-Republican
0:50:52 on who they think will be better for them economically,
0:50:55 but these companies are now distressed assets.
0:50:56 They are melting ice cubes.
0:50:58 I know a lot of people at MSNBC,
0:51:01 the anchors are like pilots in the 70s.
0:51:02 They’re hugely prestigious.
0:51:06 People like them, they’re banging stewardesses,
0:51:08 but they’re pilots for Pan Am.
0:51:09 They know their numbers are limited.
0:51:11 They know that in about 10 years,
0:51:13 they’re going to be flying Amarillo to Dallas
0:51:15 for Spirit Airlines at 68k a year.
0:51:18 These are really declining assets.
0:51:19 They can still make a lot of money.
0:51:22 They still get incredibly talented people.
0:51:24 But anyways, back to this.
0:51:26 I just think it’s fucking hilarious.
0:51:29 The IGF at Elon Musk would buy MSNBC.
0:51:32 Everyone would leave or everyone of any talent would leave
0:51:34 and he would try to make it into something else.
0:51:35 I don’t know.
0:51:36 I got to be honest.
0:51:37 I think it would be fucking hilarious.
0:51:38 Your thoughts?
0:51:41 I mean, I don’t know.
0:51:43 I feel bad because I like a lot of the people at MSNBC.
0:51:48 I feel like having Elon Musk as your boss is the worst.
0:51:50 And I think it’s important.
0:51:53 I mean, listen, Fox is up.
0:51:57 Like our viewership is through the roof since the election
0:51:58 and they’ll lead up to the election.
0:52:00 And I hope that that continues
0:52:02 because I want to be able to pay for my kids
0:52:05 to go to the Big Apple Circus as many times as possible.
0:52:05 But–
0:52:08 That’s called raging moderates.
0:52:09 It’s called podcasting.
0:52:10 Is that what it is?
0:52:10 Yeah.
0:52:11 Great.
0:52:11 I’m going to call me out.
0:52:12 You literally–
0:52:13 Subscribe.
0:52:16 You are the economic bellweather here.
0:52:19 Right now, a 34-year-old, Jess Tarlov,
0:52:23 has more options than almost any person in media right now.
0:52:26 And you chose a podcast with the dog.
0:52:27 That’s right.
0:52:29 That says it all.
0:52:31 You could have had–
0:52:32 You could have literally been prime time.
0:52:33 And don’t lie to me.
0:52:36 You could have been prime time MSNBC.
0:52:40 And you decided to do this Joy Bagadona’s podcast
0:52:41 because here’s the thing.
0:52:42 We’re going like this.
0:52:44 This is me making a hand signal up.
0:52:45 And MSNBC–
0:52:46 I hope you’re watching the YouTube version.
0:52:47 We’re going up.
0:52:51 MSNBC and even your good friends at Fox.
0:52:51 I mean, they’re the–
0:52:53 I used to say the tallest midget.
0:52:55 And then I found out that all Democrats think that’s hateful.
0:52:57 You’re the fastest tortoise.
0:52:59 That’s the more politically correct way to say it.
0:52:59 Yeah.
0:53:01 You’re the fastest tortoise.
0:53:01 But anyways–
0:53:03 I don’t mind that.
0:53:06 But what happens–
0:53:08 A lot of people will leave, obviously.
0:53:14 But I do think that there is a real problem with the psyche
0:53:17 of the average MSNBC viewer.
0:53:21 That they’re losing their minds that Joe and Mika would even
0:53:23 have a conversation with President-elect Donald Trump.
0:53:24 Great point.
0:53:26 I didn’t think it was that bad.
0:53:27 It’s insane to me.
0:53:31 Like, don’t you want any access also to the most powerful man
0:53:32 in the world?
0:53:33 I understand.
0:53:34 They did the right thing.
0:53:35 Like, just be craven about it.
0:53:38 And yeah, if they don’t want to get audited, yeah, same.
0:53:39 I don’t want to get audited.
0:53:41 And they have probably more interesting stuff going on
0:53:43 in their tax returns than I do.
0:53:45 Like, you should go and kiss the ring.
0:53:47 And that is the thing about having an entertainer
0:53:49 as the president.
0:53:50 He appreciates it.
0:53:53 If you show up and you say, Donald, you’re a beautiful color
0:53:54 today.
0:53:56 How do you keep your hair intact?
0:53:56 Whatever.
0:53:59 He’s going to like you and probably leave you alone.
0:54:01 What shade of orange is that?
0:54:04 That’s it for this episode.
0:54:06 Thank you for listening to Raging Moderates.
0:54:09 Our producers are Caroline Shagren and David Toledo.
0:54:11 Our technical director is Drew Burroughs.
0:54:14 You can find Raging Moderates on its own feed every Tuesday.
0:54:17 That’s right, Raging Moderates on its own feed.
0:54:18 Please go there and subscribe.
0:54:21 Please follow us wherever you get your podcasts.
0:54:24 Just have a great rest of the week.
0:54:25 You too.
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0:01:49 Today’s number, 243,000.
0:01:51 That’s about how many views Jaguar’s commercial
0:01:55 for its rebranded logo got in 24 hours on YouTube.
0:01:59 I was trying to find a joke that would bring together
0:02:01 necrophilia, bestiality, and masturbation,
0:02:02 but at this point,
0:02:05 it just feels like I’d be beating a dead horse.
0:02:19 That’s why the people come here, Ed.
0:02:21 What’s going on today?
0:02:23 We’re discussing an earnings crisis at Target.
0:02:26 Why Comcast is shedding its cable business.
0:02:27 Good bank, bad bank.
0:02:29 – First off, did you see the new Jaguar logo?
0:02:30 – Jaguar, listen to you.
0:02:32 Listen to you little saucy bitch.
0:02:34 You were just dying to say Jaguar.
0:02:35 – No, I wasn’t.
0:02:36 That’s how I say it,
0:02:37 because I’m from a different country.
0:02:38 – If you ask for another raise,
0:02:40 we’ll find you dead in the boot.
0:02:44 I just made that up, it was pretty good.
0:02:46 Have I seen, I’m sorry, have I seen what?
0:02:48 – Have you seen Jaguar’s?
0:02:50 That’s how it’s pronounced.
0:02:51 Have you seen their new logo?
0:02:53 – No, but they pasted it on our producers,
0:02:54 pasted it in.
0:02:55 – Okay, so please check it out,
0:02:57 because everyone’s talking about this
0:02:59 and you are the marketing professor.
0:03:00 We need your reaction.
0:03:03 – Oh no, this is the new logo?
0:03:06 No, no, no, no, no, no, no, no, no, no, no, no, no, no.
0:03:08 Come on, hold on.
0:03:11 I actually use this logo in my class.
0:03:13 Look at this thing, he’s out, he’s hunting,
0:03:17 he’s bringing home the prey for his wife and his kids.
0:03:22 He’s elegant, he’s sleek, he’s a jungle cat, Jaguar.
0:03:24 And then they go to this fucking thing
0:03:26 that looks like it was created by AI.
0:03:30 We can process images 50 to 60 times faster than words.
0:03:32 So this is going against our instincts
0:03:33 as it relates to marketing.
0:03:36 If you are blessed with a logo,
0:03:37 like they used to have,
0:03:40 that visual metaphor of that incredibly strong,
0:03:42 yet elegant, yet powerful,
0:03:46 Jaguar’s are the only animal that when hunted,
0:03:48 this is a true story,
0:03:50 the only animal that when hunted,
0:03:51 will perceive they’re being hunted
0:03:56 and then sprint, circle around, and then hunt the hunter.
0:03:58 You wanna talk about snatching defeat
0:03:59 from the jaws of victory?
0:04:01 That is one of the greatest visual metaphors
0:04:02 in automobile history.
0:04:05 And instead they went to this fucking
0:04:07 Westworld dystopic, weird.
0:04:08 – It’s awful.
0:04:09 – Terrible decision.
0:04:13 – So what do you think happened in the Jaguar boardroom?
0:04:15 Why do you think they signed off on this?
0:04:17 What do you think is the strategy here?
0:04:21 Like, everyone agrees this is the worst rebrand of all time.
0:04:23 Why do you think they went ahead with it?
0:04:24 – Because they spent a lot of money
0:04:26 in a design agency that’s populated
0:04:28 with very good looking young people who wear black,
0:04:30 who seem to understand more about design
0:04:32 and they came in and used a bunch of fancy terms
0:04:35 like elegant and progressive.
0:04:36 And this is more for a modern age.
0:04:39 We need to update it and you need to pay us $30 million
0:04:42 to redesign all the logos outside the conference rooms
0:04:44 and all the shit and all the dealerships.
0:04:46 By the way, I had just a quick tip
0:04:48 when you’re shopping for a car,
0:04:51 don’t eat the clam chowder at the Lexus September
0:04:52 to Remember event.
0:04:56 – I would love, but I’ve heard this joke already.
0:04:57 – It never gets old.
0:04:59 You gotta recycle the good stuff.
0:05:01 You gotta recycle the good stuff.
0:05:02 – Well, I guess I did laugh anyway, so.
0:05:04 – I can tell you, I know what happened here
0:05:05 without knowing what happened.
0:05:08 It’s a new CMO who’s decided to put his or her
0:05:10 footprint or imprint on the company
0:05:12 and it’s convinced them they needed a new fucking logo
0:05:16 because actual work around things like customer acquisition
0:05:18 and figuring out digital platforms, you know,
0:05:21 that’s real work instead I hire interbrand
0:05:24 or my old firm profit to come in
0:05:26 and have very compelling, very articulate,
0:05:29 very attractive people tell you why this logo
0:05:31 connotes something that fits to a modern age.
0:05:33 This is a stupid fucking decision.
0:05:36 This is the equivalent of putting shareholder money
0:05:40 in the middle of the road and running over it
0:05:43 in an XJS, was it the XJS or the XJR?
0:05:46 – Just my one little comment on the Jaguar thing.
0:05:49 Their new tagline is copy nothing.
0:05:51 Like this is sort of their bold rebrand
0:05:53 and they keep on saying, you know, copy nothing.
0:05:54 This is the only thing.
0:05:56 But I look at that logo and it’s like,
0:06:00 you copied every single tech startup
0:06:02 that we’ve seen over the past like five to 10 years.
0:06:05 Like this literally is just like classic,
0:06:08 dystopian, metaverse type 2D font
0:06:10 where it’s all spaced out and clean looking.
0:06:12 Like it’s just, it looks like a tech company.
0:06:15 – This is the final nail in the coffin of British culture.
0:06:17 – Yeah, good point.
0:06:19 – When Americans obsession, fetish,
0:06:23 masturbatory, fantasies of AI, bastard.
0:06:24 I’m shocked they don’t have,
0:06:26 I’m shocked it’s not jaguar.ai
0:06:29 and they’re trying to pretend to be a tech company.
0:06:32 But this is a scent.
0:06:35 Look at how beautiful their old logo is.
0:06:38 I wanna be that guy out in the jungle.
0:06:39 Just sleek and strong.
0:06:41 Don’t fuck with me.
0:06:42 Don’t fuck with me.
0:06:46 Oh God, that shit is, that shit is money.
0:06:49 The next like, if I see a super attractive Gara Gallat F1,
0:06:52 I’m gonna come up after a few cocktails,
0:06:53 a lot of cocktails and I’m gonna be like,
0:07:01 dude that’s how you lose your virginity at 19, boom.
0:07:03 – And that’s how we open the show.
0:07:06 Let’s start with our weekly review of market vitals.
0:07:08 (upbeat music)
0:07:11 (upbeat music)
0:07:15 The S&P 500 was volatile, the dollar climbed.
0:07:18 Bitcoin hit a fresh record above $98,000.
0:07:22 I wouldn’t be surprised if it hits 100 by the time this airs
0:07:25 and the yield on 10 year treasuries slumped.
0:07:26 Shifting to the headlines.
0:07:29 The Justice Department proposed a forced sale of Chrome
0:07:31 as a potential remedy in the Google antitrust case.
0:07:33 The browser, which has approximately
0:07:35 three billion monthly active users
0:07:38 could be valued at up to $20 billion.
0:07:42 MicroStrategy sold $2.6 billion worth of convertible bonds
0:07:45 to fund its Bitcoin buying spree.
0:07:47 The business intelligence firm already owns
0:07:49 nearly $31 billion worth of the cryptocurrency
0:07:52 and plans to buy more over the next three years.
0:07:54 The stock rose to a record high after the sale
0:07:57 and it’s up more than six fold year to date.
0:07:59 And finally, Nvidia’s third quarter earnings
0:08:01 beat analyst expectations with revenue
0:08:06 topping $35 billion, that is up 94% from a year earlier.
0:08:09 The company also projected revenue for the current quarter
0:08:12 will jump to $37.5 billion.
0:08:14 While that forecast was slightly above
0:08:17 analysts expectations, the stock still fell
0:08:18 more than 2% after hours.
0:08:21 Scott, your thoughts, starting with the DOJ’s
0:08:24 proposed forced sale of Google Chrome.
0:08:25 – Look, I love this.
0:08:27 If you go back in economic history,
0:08:30 it would be very difficult to find an instance
0:08:33 where the breakup was not good for the economy,
0:08:37 was not good for the tax base, was not good for shareholders,
0:08:39 was not good for the employees who now have more companies
0:08:41 bidding to rent their labor.
0:08:45 The only stakeholder that loses in a breakup
0:08:47 throughout economic history is the individual
0:08:49 who wants to sit on the iron throne of all realms,
0:08:51 not just Westeros.
0:08:53 I mean, search is essentially,
0:08:55 I think it’s the biggest gross margin dollar business
0:08:58 in the world and there’s one company that dominates it.
0:09:02 And if you gave, if you took away the data set
0:09:05 in the interface of two thirds or three and a half
0:09:10 million people who use Chrome and it was now a competitor
0:09:12 that could offer data and opportunities
0:09:14 for other potential search engines,
0:09:16 I think that would be good for everybody.
0:09:17 I mean, who knows?
0:09:20 Someone might come up with a search engine
0:09:22 that is not trying to target young people
0:09:24 or that screens out misinformation
0:09:28 or doesn’t bring sunlight to conspiracy theory
0:09:30 greater than its organic reach.
0:09:33 I had a really interesting conversation with Eric Schmidt
0:09:35 or we did, I don’t know if it’s on this pot
0:09:38 or one of my other 45 Joey Bagadona’s podcasts.
0:09:39 I was not there for it.
0:09:40 There you go.
0:09:42 Well, actually, you know, it’s funny,
0:09:43 you did an outstanding job.
0:09:45 (laughing)
0:09:47 Anyways, but Eric, the former CEO,
0:09:49 not of Alphabet, but of Google,
0:09:51 he said something really that really struck me.
0:09:53 He said that individuals should have
0:09:55 almost limitless free speech,
0:09:59 but computers should not have free speech.
0:10:01 And that really struck me as an elegant way
0:10:02 to approach the problem.
0:10:05 Because when I look at the majority of really vile shit
0:10:07 that’s trying to polarize people
0:10:09 or spread conspiracy theory,
0:10:10 whenever I’ve kind of clicked on it
0:10:13 and tried to figure out who this person is,
0:10:14 I find out it’s not a person.
0:10:18 It’s clearly a bot that’s used and being used
0:10:20 to amplify either conspiracy theory
0:10:23 or a certain ideology or simply put,
0:10:25 it’s a bad actor trying to get a shitposting
0:10:28 each other and arguing with each other.
0:10:30 So more competition,
0:10:31 you might find people say,
0:10:34 “Well, I want a family safe search company.
0:10:36 “I want a search company that doesn’t have,
0:10:39 “doesn’t add supported such that it takes you
0:10:41 “to the best answer, not to the answer
0:10:43 “they can further monetize.”
0:10:45 – Well, I’m gonna disagree with you on your take here.
0:10:48 I think you’ve brought up a lot of important issues,
0:10:51 but they’re all kind of disparate issues
0:10:52 that you’re talking about here.
0:10:53 Like there’s the monopoly issue,
0:10:56 and then there’s, you know, the free speech issue,
0:10:57 and there’s the conspiracies issue.
0:11:00 Like there are just all these things that we dislike
0:11:03 about big tech and about Google.
0:11:05 But I mean, let’s just focus on
0:11:08 what did Google actually do wrong here?
0:11:10 And if you read through the judge’s case,
0:11:13 the big thing that the judge identified
0:11:15 was the fact that Google was paying billions of dollars
0:11:18 to other companies, particularly Apple,
0:11:21 to be the default search engine on those devices.
0:11:23 There’s a very easy way to address that.
0:11:25 And that’s just break up their relationship with Apple.
0:11:28 Just tell them you’re not allowed to keep paying Apple
0:11:30 to be your default browser.
0:11:32 And now that is something that DOJ
0:11:35 is supposedly going to recommend as a remedy.
0:11:39 But to add on top of that, the forced sale of this asset
0:11:44 that is in many ways integral to Google’s business,
0:11:45 it just doesn’t feel like a remedy.
0:11:47 To me, it feels more like a punishment.
0:11:51 And in my view, if you’re gonna focus on punishing Google,
0:11:52 I personally think punishments
0:11:54 should come in the form of fines.
0:11:57 But the idea of forcing them to sell Chrome,
0:11:59 which would just dramatically transform
0:12:01 one of the most important businesses in America,
0:12:03 the online search market,
0:12:06 that to me just feels like a step too far from government.
0:12:07 – I just had this horrific image
0:12:10 that I finally get the call from the White House
0:12:12 asking me to be Secretary of Education
0:12:14 or Commerce Secretary.
0:12:15 And the call’s actually for you
0:12:17 and they’re just trying to get your name.
0:12:19 I think that’s a really solid take.
0:12:24 I would argue though that the data around traffic patterns
0:12:27 and behavior captured on the front end
0:12:31 of the true access point to the digital world
0:12:33 is the browser.
0:12:35 And so the amount of data they get
0:12:37 around where people are going, their trends,
0:12:40 that they can then feed into their search algorithms
0:12:42 to better provide better targeting
0:12:45 for clients who advertise on Google.
0:12:47 I would think that gives them almost an unassailable
0:12:52 advantage that results in a 90 plus percent share of search.
0:12:53 – It’s huge.
0:12:56 But it’s also why the product is so good, right?
0:12:58 I mean, the data is all part of the business.
0:13:01 – What you don’t realize with a monopoly
0:13:02 is you don’t know what you’re missing.
0:13:04 So for example, do you think Google search
0:13:06 has really innovated in the last decade?
0:13:07 – No.
0:13:10 – All of the innovation has been how to turn advertisers
0:13:12 up by their heels and shake more money from them.
0:13:14 It hasn’t been around consumer innovation.
0:13:18 So I would push back and say the monopoly power here,
0:13:21 we don’t know the innovation we’re missing.
0:13:24 I just don’t buy it as a means to breaking them up.
0:13:27 And my reaction would be that this won’t hold off in court.
0:13:29 But I agree with you that, you know,
0:13:31 perhaps the world would be a better place
0:13:32 if Google were broken up.
0:13:34 So we move on to MicroStrategy,
0:13:37 which is absolutely tearing right now.
0:13:41 And you’re actually friends with the founder and CEO,
0:13:44 Michael Saylor, who’s been on this podcast before.
0:13:46 What are your initial reactions to MicroStrategy,
0:13:50 which is performing even better than Bitcoin right now somehow?
0:13:53 – So I’ve known Michael for the better part of 20 years.
0:13:55 The guy’s like crazy fucking smart.
0:13:56 And every time I meet with him,
0:13:59 I think I really should buy MicroStrategy stock or Bitcoin.
0:14:02 And I have bought none of either.
0:14:05 And so I want to find a time machine, go back,
0:14:07 find me, kill me and then kill myself.
0:14:10 I mean, I knew this guy was so bright,
0:14:13 but the thing that got in the way for me was,
0:14:15 you know, I’m an old dog, I believe in corporate governance.
0:14:18 And the idea of a CEO taking a publicly traded company
0:14:20 that does business intelligence
0:14:24 and borrowing, levering up like crazy to buy another.
0:14:26 It would be like Tim Cook saying,
0:14:28 I just believe in gold.
0:14:31 And I’m going to put $100 billion in debt on this company
0:14:33 and go buy, become the largest single owner
0:14:34 of gold in the world.
0:14:39 And it just felt so strange to me,
0:14:40 but there’s just no getting around it.
0:14:43 The guy is a fucking visionary.
0:14:46 When I had him on the pod two, three years ago,
0:14:50 Bitcoin was at 18,000 and it had spiked from 5,000.
0:14:51 I’m like, gonna go wait till it goes down to five again.
0:14:53 He’s like, trust me on this, just buy a little bit.
0:14:57 This thing is bulletproof over the long term.
0:14:59 You know, that’s up, what, five-fold since then?
0:15:00 And what is MicroStrategy?
0:15:01 Since then, I’m not sure.
0:15:04 It’s up six-fold in the past year.
0:15:07 It’s up by 123% in the last 30 days.
0:15:09 And because he takes debt,
0:15:12 it’s basically MicroStrategy has become
0:15:14 a levered bet on Bitcoin.
0:15:18 It’s like buying an ETF on China that’s 3x, it’s levered up.
0:15:20 So look, there’s just no getting around it.
0:15:23 Even crypto skeptics like myself have to acknowledge
0:15:25 that I believe that Bitcoin
0:15:29 has become a credible, tangible store value.
0:15:31 You know, it’s a speculative asset, no doubt about it,
0:15:35 but Michael is, you know, from an IQ standpoint,
0:15:39 he’s flying at a different altitude and he saw this.
0:15:42 And my gosh, you wanna talk about balls
0:15:45 the size of really big balls?
0:15:50 I mean, this guy basically said,
0:15:52 business intelligence, missionless intelligence,
0:15:55 we’re levering up and we’re buying Bitcoin.
0:15:57 – I think the question a lot of people are asking is like,
0:16:01 why is MicroStrategy up so much more than Bitcoin?
0:16:03 I think part of it is what you said,
0:16:07 which is this is like a levered up Bitcoin play
0:16:08 because they’re borrowing money
0:16:10 and then using that money to buy more Bitcoin.
0:16:12 So it’s just gonna be a more volatile version
0:16:14 of Bitcoin right now.
0:16:17 But I think there is a second story here,
0:16:19 a second reason why people are so obsessed
0:16:21 with MicroStrategy right now.
0:16:25 And that is the Bitcoin holdings are worth a quarter
0:16:27 of the company’s entire market cap.
0:16:28 And they don’t have cash,
0:16:30 which is why they’re borrowing money
0:16:32 to just go buy more Bitcoin.
0:16:34 And if you look at their earnings reports,
0:16:38 they now identify not as a business intelligence firm,
0:16:40 which is what this company has always been,
0:16:44 they call themselves a quote Bitcoin treasury company.
0:16:47 And that is the through line of the entire earnings report.
0:16:50 It’s like, here’s our plan to buy more Bitcoin.
0:16:54 Here’s our plan to build out a Bitcoin ID network.
0:16:56 Here are the list of conferences,
0:16:58 these Bitcoin conferences that we will be hosting
0:16:59 and attending.
0:17:03 Meanwhile, the actual business, the way they make money
0:17:04 is practically treated like a footnote.
0:17:07 Like it doesn’t seem to matter that much to them.
0:17:10 So when I look at what’s happening here,
0:17:11 I think there are two people buying this stock.
0:17:14 It’s one, the people making the lever play,
0:17:17 but then it’s two, the people who believe that,
0:17:20 you know, if Bitcoin is the future,
0:17:23 MicroStrategy is the leader of that future.
0:17:26 This is gonna be the official Bitcoin company.
0:17:29 They believe that MicroStrategy is somehow
0:17:31 gonna pioneer this new space.
0:17:34 My only question would be in what way
0:17:35 will they pioneer the Bitcoin space?
0:17:38 What does that actually look like?
0:17:39 It’s not very clear to me.
0:17:42 The strategy is very vague, it’s very hand-wavy,
0:17:44 which is why personally, I don’t really buy it.
0:17:48 – If I had been on his board five years ago
0:17:50 and he said, “We’re levering up to buy Bitcoin.”
0:17:52 – You would have been a nightmare.
0:17:54 – I know, very simple.
0:17:55 I would have either been kicked off the board
0:17:56 or I would have resigned
0:17:59 because everything I know about corporate governance,
0:18:01 I would have said, “Michael, you’re a billionaire.
0:18:03 “If you wanna sell your stock
0:18:06 “and go start a Bitcoin company, have at it.
0:18:10 “But don’t take your fiduciary for our shareholders.
0:18:11 “They think they’re investing
0:18:14 “in a business intelligence company.”
0:18:15 And I would have been wrong.
0:18:18 His shareholders have done extraordinarily well.
0:18:19 – We’ll see, we’ll see.
0:18:22 I’m still with you on that take.
0:18:26 I think this could end very badly personally.
0:18:29 And by the way, our producer is messaging me,
0:18:31 “Sitron research just shorted the stock
0:18:33 “and the shares are off around 9%
0:18:34 “as we are speaking right now.
0:18:36 “So clearly I am not the only one
0:18:38 “who’s skeptical about this company.”
0:18:39 – I’m with you.
0:18:44 And the things I don’t like about Bitcoin are,
0:18:45 I actually believe in transparency.
0:18:48 And I understand that people feel like they should have
0:18:50 privacy as it relates to their money.
0:18:55 But this asset class has been used
0:18:57 in some pretty frightening ways.
0:19:01 And maybe you could argue that’s the government’s job
0:19:02 and people have a right to privacy.
0:19:05 And this is a longer conversation,
0:19:08 but the reality is he’s winning.
0:19:10 And they’re just not getting around it.
0:19:12 The guy is a visionary.
0:19:14 I keep waiting for it to come down
0:19:15 so I can buy a little bit of Bitcoin,
0:19:17 but it’s not cooperating with me.
0:19:19 And then every time I see it go up every day,
0:19:21 I’m like, “Oh, Jesus, here we go.”
0:19:23 – It’s gonna be a big day when ProfG finally buys
0:19:24 some Bitcoin.
0:19:25 We’re gonna have to have a celebration.
0:19:27 – Yeah, that means sell everything.
0:19:29 – Yeah, exactly.
0:19:31 Let’s just quickly move on to Nvidia here.
0:19:33 I personally don’t have much to say about these earnings
0:19:36 ’cause it’s kind of the same story we’ve seen,
0:19:39 quarter after quarter, I mean, revenue doubled,
0:19:42 profits grew, estimates were beat,
0:19:47 and then the stock kind of stumbled but then hummed along.
0:19:49 And this is what we’ve come to expect.
0:19:51 I mean, every single quarter,
0:19:55 Nvidia just absolutely destroys and the market says,
0:19:57 “Okay, that’s sort of what we expected.”
0:20:00 The only thing that I would say that struck me,
0:20:02 and this is more of a media observation
0:20:05 than an investing observation,
0:20:08 is that last night before the earnings,
0:20:10 I was just thinking,
0:20:12 it actually doesn’t matter what happens
0:20:13 in this earnings report
0:20:16 because you and I are gonna cover this either way
0:20:20 because this company is just so important at this point.
0:20:23 It makes up 7% of the entire S&P.
0:20:27 It’s in practically every American’s retirement account.
0:20:30 It’s just gotten to this point where it’s like,
0:20:31 it’s systemic to everything.
0:20:32 You can’t ignore it.
0:20:35 It has to be covered whether or not it’s interesting.
0:20:36 And then I think the thing,
0:20:39 Jensen Huang that really summed it up on the earnings call,
0:20:41 he said, quote, “Every company in the world
0:20:44 “seems to be involved in our supply chain.”
0:20:45 And I think he’s right.
0:20:49 This is just, the world relies on Nvidia
0:20:50 in so many ways at this point.
0:20:52 I think it’ll probably go down
0:20:54 as one of the great companies of our time.
0:20:55 – I mean, if you talk about,
0:20:57 it’s really hard for people to get their head around
0:20:59 the value creation here.
0:21:02 And that is if you took the entire German stock market,
0:21:05 every company from Daimler-Benz to Siemens,
0:21:07 the entire German stock market,
0:21:09 the entire French stock market,
0:21:13 all of the best companies in these respective economies,
0:21:16 all of them, Nvidia’s market cap is greater
0:21:20 than the entire stock market of these countries.
0:21:22 And if you really think about that,
0:21:24 if you think about the amount of human capital,
0:21:25 investment, government support,
0:21:27 people who spend their lives at these companies,
0:21:31 the IP, the customer bases, the global customer bases,
0:21:32 take every one of them,
0:21:34 every one of them and add them all together,
0:21:36 they’re not worth as much as Nvidia.
0:21:40 So this is a phenomena.
0:21:42 We don’t know how long it can last.
0:21:46 Yet another fucking amazing asset class that,
0:21:47 I am not in.
0:21:49 I am not in this, Ed.
0:21:51 I keep waiting for it to get cheaper.
0:21:54 – We’ll be right back after the break
0:21:56 with a look at target settings.
0:21:57 If you’re enjoying the show so far
0:21:59 and you haven’t subscribed,
0:22:00 be sure to give PropG Markets a follow
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0:25:21 Target and Walmart both reported third-quarter earnings
0:25:24 and once again, it was a tale of two retailers.
0:25:26 Walmart sales rose over 5%,
0:25:28 solidifying a position as the top-performing retailer
0:25:33 in the S&P 500, while targets only rose 0.3%.
0:25:35 Walmart also raised its fiscal year guidance
0:25:38 for the third time and target lowered its outlook.
0:25:40 So the market’s response highlighted that contrast
0:25:44 after the earnings call Walmart stock rose 3%.
0:25:48 Meanwhile, target stock fell more than 21%.
0:25:52 It’s worst day since 2022.
0:25:53 The first thing I will note, Scott,
0:25:57 is that we have basically told this exact same story
0:25:58 before on this podcast.
0:26:02 I’m pretty sure we called it the tale of two retailers.
0:26:04 We’ve seen this before.
0:26:08 Target slumping and Walmart doing really, really well.
0:26:10 So what are your reactions to the fact
0:26:13 that we’re sort of in a deja vu position
0:26:15 in third quarter 2024?
0:26:16 So let me start off by saying I love Target.
0:26:19 I go to the Super Target in Boca Raton
0:26:20 and I think they do a great job.
0:26:22 I have not worked with senior management at Target.
0:26:24 Actually, I had some interaction with the CMO there,
0:26:27 but at one point I had a decent amount of interaction
0:26:30 with everyone, including the board and the CEO at Walmart,
0:26:33 and it’s an exceptionally well-run company.
0:26:35 And what was interesting about this
0:26:38 is that they are going after Target’s white meat
0:26:40 and that is Target was always a cooler,
0:26:42 hipper, better merchandise,
0:26:44 more aspirational version of Walmart.
0:26:45 That you can have value,
0:26:49 but you can have a little bit of sizzle,
0:26:54 a little bit of salsa on that chip, if you will.
0:26:56 And they had their own brands,
0:26:58 kind of a better branding campaign.
0:27:01 It was a positioning that worked really well.
0:27:05 But Walmart’s coming for their core.
0:27:07 I mean, really coming for their heart and their lungs.
0:27:09 And that is the point of differentiation.
0:27:11 They did a lot of wealthy people
0:27:13 who wanted value shop to Target.
0:27:15 Now they’re just going straight to Walmart.
0:27:17 Automation played a big role here.
0:27:19 Walmart is now automating two times
0:27:20 their fulfillment center volume year on year.
0:27:23 Well, Target’s is only 25% more automated.
0:27:26 So Walmart has the capital and the vision
0:27:28 to make huge investments in digital.
0:27:29 Some of them didn’t pay off.
0:27:31 They paid, I think they overpaid for JET
0:27:33 and they bought Bonobos,
0:27:34 which was a stupid acquisition.
0:27:37 Nice guys, but it was just like a cute little concept
0:27:41 that they, anyway, those guys got incredibly lucky
0:27:44 in my view, but about 75% of Walmart’s increase
0:27:47 in market share this quarter came from households
0:27:50 earning over $100,000, which is the demographic
0:27:52 typically associated with people shopping at Target.
0:27:57 So people want convenience and affordability.
0:28:01 Walmart, the unlimited deliveries for $12.95 a month.
0:28:05 And people are focused on spending smart.
0:28:08 Groceries were 60% of Walmart’s US sales.
0:28:10 While the category accounts for less than 25%
0:28:11 of Target sales.
0:28:13 And I would imagine that groceries is a,
0:28:16 while a low margin business, it’s a more consistent business.
0:28:18 And if you look at the two companies,
0:28:21 Walmart’s trading at 36 times earnings.
0:28:24 Target is trading at 12.
0:28:27 And the analogy here that you brought up,
0:28:29 which is a really interesting one,
0:28:32 is the analogy between a dominant number one
0:28:34 and a very distant two, and that is Uber and Lyft.
0:28:35 And they’re eerily similar.
0:28:38 Uber’s up 157% over the last five years
0:28:40 while Lyft is down 62%.
0:28:41 Actually, I think to see,
0:28:43 I think both have outstanding CEOs.
0:28:45 Dara Costa-Schei and the CEO at Lyft
0:28:47 are both impressive people.
0:28:49 By comparison, similarly, if you will,
0:28:52 Walmart’s up 120% over the last five years
0:28:55 while Target is down about 4%.
0:28:57 So this is what I think is gonna happen.
0:28:58 And I’ll come back to this.
0:29:02 I think Target’s beginning to look like a juicy LBO Target
0:29:05 or at a minimum, they’re gonna have an activist in there.
0:29:07 This thing is now cheap enough.
0:29:10 It still has a charm brand and a great real estate.
0:29:13 I think if I were to try and speculate with the problem
0:29:14 is it’s the following.
0:29:17 When you’re dealing with a CPG company
0:29:20 or a retailer in a duopoly, Coke Pepsi,
0:29:24 everyone’s compensation mojo DNA is focused on one thing.
0:29:26 And that is share.
0:29:28 You do not give, if you’re Pepsi,
0:29:32 you do not and you’ve got 17.8% share.
0:29:35 If it goes to 17.6 as the brand manager,
0:29:36 you might get fired.
0:29:39 So you become so obsessed with share
0:29:44 that in the market also is very focused on your share
0:29:46 that you can’t make the hard decisions
0:29:47 that I think you need to make.
0:29:49 And I would argue that Target just needs to be
0:29:52 a dramatically smaller company that’s more profitable.
0:29:54 They have 1,900 stores.
0:29:58 It should probably be 1,000 or 1,200 and cut costs
0:30:01 and make this a more profitable, smaller business.
0:30:05 And I think that would best be done outside
0:30:06 of the scrutiny of a publicly traded company.
0:30:08 And when you look at the fact that PE firms
0:30:09 have a quarter of a trillion dollars
0:30:11 on their balance sheet ready to deploy,
0:30:15 when you look at the fact this thing is getting pretty cheap,
0:30:17 one or two things is gonna happen.
0:30:19 We’re either gonna see an activist
0:30:21 or we’re gonna see a potential club deal
0:30:22 and take private here.
0:30:23 – Very interesting.
0:30:26 So, Target’s market cap is 56 billion.
0:30:29 Its enterprise value is around 72 billion
0:30:31 if you account for the debt.
0:30:33 Who’s got that money?
0:30:35 – Oh, it would have to be a club deal,
0:30:37 but you got it, like I said,
0:30:40 PE has 250 billion dollars in dry capital
0:30:41 and they could finance a lot of it with debt.
0:30:45 It’s still, you know, if it’s trading at a PE of 12,
0:30:47 that means it’s got five billion in earnings.
0:30:50 So they could probably borrow, you know,
0:30:52 10 to 20 billion of it and they get a club deal,
0:30:54 get a bunch of the biggest players
0:30:55 to each come up with 10 billion.
0:30:57 Yeah, they could get this deal done.
0:31:00 But I think what you’re gonna have in,
0:31:04 I mean, the three biggest deals I think in LBO history
0:31:08 were HCA, RGR, but none of them have happened
0:31:10 in the last several years.
0:31:12 But all the moons are lining up
0:31:14 for what I think will be probably the biggest LBO
0:31:15 in history in 2025.
0:31:17 I think it’s either gonna be Intel
0:31:18 or this company, Target.
0:31:20 People say they know Walmart’s bigger,
0:31:24 but oftentimes people will mention Target
0:31:26 in the same breath as Walmart.
0:31:26 – Absolutely.
0:31:29 Target has a $56 billion market cap.
0:31:31 Walmart’s is 700 billion.
0:31:32 – It’s crazy.
0:31:35 – I can tell you, a lot of PE guys are sharpening
0:31:36 their pencils and looking at this thing
0:31:39 and they’re calling their buddies and saying,
0:31:40 if the CEO’s down with this
0:31:41 and we think we can make this happen,
0:31:44 are you in for one, five, 10 billion in equity,
0:31:48 talking to banks, how much could we finance on this thing?
0:31:51 This is, there’s a lot of people,
0:31:52 I would imagine a lot of very smart people
0:31:53 looking at this company right now.
0:31:56 – I would like to just focus on Target
0:31:58 and the earnings themselves.
0:32:01 And then we’ll compare it to Walmart,
0:32:04 but just to highlight what happened to Target.
0:32:08 So revenue rose just 1%, which is way below expectations.
0:32:12 Profits fell 12%, also way below expectations.
0:32:14 And they said, Target,
0:32:17 that there were two main issues they were dealing with.
0:32:19 The first issue was the Longshoreman Strike,
0:32:20 which we’ve discussed before.
0:32:21 There were all these strikes
0:32:25 at many of our largest ports in America back in October.
0:32:29 And that was a problem and Target said that as a result,
0:32:31 their freight costs and their supply chain costs
0:32:33 were a lot higher.
0:32:36 The second issue that they highlighted was consumer demand.
0:32:40 So the average ticket size for Target customers
0:32:42 was down 2%.
0:32:45 They also saw a pretty significant decline
0:32:47 in their discretionary spending.
0:32:49 And the way Target positioned that problem
0:32:52 is that there is this macro issue in America
0:32:53 happening among consumers.
0:32:56 Consumers in America are tight on cash.
0:33:00 And so they’re just more cautious about spending right now.
0:33:03 Okay, now let’s compare that to Walmart.
0:33:06 Sales rose more than 5%.
0:33:09 Profits higher than expected.
0:33:13 Average ticket size grew more than 2%.
0:33:15 And so the story over at Walmart
0:33:17 that they are telling shareholders,
0:33:20 and mind you, these earnings calls happen in the same week.
0:33:22 So we’re looking at what happened to Target
0:33:24 and then immediately following that
0:33:26 with what happened to Walmart.
0:33:28 The story is that customers are going to Walmart
0:33:32 more frequently and when they do, they’re also spending more.
0:33:37 So this macro boogie man that Target seems to be talking about
0:33:39 when it comes to consumer demand
0:33:41 that is supposedly hurting Target,
0:33:43 for whatever reason, it isn’t touching Walmart.
0:33:45 Walmart’s doing just fine.
0:33:47 And then the Longshoreman strike,
0:33:49 Walmart is the second largest importer
0:33:51 of the affected ports from that strike.
0:33:54 The only one ahead of it is LG Electronics.
0:33:58 It should have been hit way harder by this strike than Target.
0:34:01 But Walmart said that, yes, it was a slight issue,
0:34:02 but they managed the inventory well.
0:34:06 They only saw a 0.6% decline in their inventory level.
0:34:09 So in other words, Walmart just figured it out.
0:34:11 The consumer issue wasn’t a problem,
0:34:13 and neither was the Longshoreman strike.
0:34:18 So this, again, is a story we’ve told before.
0:34:20 This is the fourth straight quarter
0:34:23 in which Target has blamed their underperformance
0:34:27 on something else, whether it’s inflation or demand or strikes,
0:34:30 or in some cases, even shoplifting.
0:34:32 And meanwhile, Walmart is overperforming.
0:34:33 They’re doing just fine.
0:34:38 So I think the question you have to ask Target now
0:34:42 is at what point will you publicly recognize
0:34:44 that maybe this is your fault?
0:34:46 Maybe this isn’t America
0:34:47 and the consumer’s doing something wrong.
0:34:50 Maybe this is you doing something wrong
0:34:53 and maybe you need a drastic change
0:34:57 because Wall Street just isn’t buying this narrative anymore.
0:35:00 There’s a reason the stock dropped more than 20%.
0:35:02 They’re just done with it.
0:35:05 So I guess my question to you would be,
0:35:07 what does the boardroom do now?
0:35:10 I think the activist point was a good one.
0:35:12 It seems like I’m sure a lot of activists
0:35:14 are coming in here and looking to shake things up.
0:35:16 But what do you think the conversations
0:35:19 in the boardroom of Target are looking like right now?
0:35:21 What is probably going to happen
0:35:23 and what the board should do is simple.
0:35:25 They should fire the CEO.
0:35:28 And that is your analysis is correct.
0:35:31 At some point, it’s about you, boss.
0:35:34 You know, all the problems you’re claiming
0:35:36 that are these macro systemic issues,
0:35:39 Walmart seems to have figured out.
0:35:40 So it’s simple here.
0:35:44 Doug McMillan gets a raise and Brian Cornell gets fired.
0:35:46 He’s been the CEO for the last 10 years.
0:35:49 This company has underperformed dramatically.
0:35:50 It’s peer group.
0:35:52 And maybe it’s not his fault,
0:35:54 but at a minimum they need a fresh change.
0:35:58 And the way I look with CEOs, people say, fire ’em.
0:36:00 CEOs make so much fucking money,
0:36:03 they should be held to a higher standard.
0:36:04 Yeah, he’s fine.
0:36:05 And this is what’s going to happen.
0:36:06 The chairman of the board,
0:36:08 I would bet in the next couple of weeks.
0:36:08 Really?
0:36:09 Okay.
0:36:10 Well, I get the timing wrong.
0:36:12 This guy’s on the green mile.
0:36:15 He just is, he gets a call from the chairman
0:36:17 and says, Brian, yeah, you know, love you,
0:36:19 but we’re going to make a change.
0:36:21 And they’re going to give them a golden parachute
0:36:23 or they’ll give them the Ford Vesta’s options.
0:36:26 But no, he should be, this is an easy one.
0:36:28 He is, in my opinion,
0:36:32 after 10 years of really mediocre performance,
0:36:36 he absolutely deserves to be terminated in my view
0:36:37 or let go.
0:36:39 And I would, I’d be shocked if that didn’t happen.
0:36:40 And if it doesn’t happen,
0:36:43 that’ll be the first thing on an activist PowerPoint deck
0:36:46 is that management has vastly underperformed.
0:36:49 He hasn’t, I want to be clear, he hasn’t been a disaster,
0:36:51 but these jobs are fairly kind of,
0:36:53 what have you done for me lately?
0:36:55 And the last five years have not been strong.
0:36:56 Absolutely.
0:36:58 Let’s just take one moment before we wrap it up here
0:37:02 to talk about what Walmart has done, right?
0:37:07 Because, I mean, the stock is up 120%
0:37:08 in the past five years.
0:37:10 And I feel like no one saw that coming.
0:37:15 Like, Walmart has generally been viewed as kind of a dinosaur
0:37:20 and more importantly, a shitty competitor to Amazon.
0:37:21 I mean, I think the story that most people believe
0:37:24 was that Amazon was gonna kick the shit out of Walmart,
0:37:27 but they’ve done really, really well.
0:37:28 I think the question is,
0:37:30 what have they gotten right specifically?
0:37:33 And just two things really jump out to me
0:37:34 that are worth highlighting.
0:37:38 The first is how they invested in Ecom.
0:37:42 So they made a set more than $7 billion investment in 2022
0:37:45 to just revitalize all of their technological infrastructure.
0:37:49 And the business is, the E-commerce business is tearing.
0:37:52 It’s up 27% year over year.
0:37:54 And you compare that to Target, which is up just 10%.
0:37:56 And you mentioned the fact
0:37:58 that they have doubled their automated fulfillment volume.
0:37:59 I think that’s really important.
0:38:03 So one part of this is their embrace of technology,
0:38:06 their embrace of the internet, which has really paid off.
0:38:10 The second one is pricing.
0:38:11 I don’t know if you remember,
0:38:13 but earlier this year,
0:38:16 Walmart came out with massive discounts
0:38:18 when inflation was ripping.
0:38:21 And our response was,
0:38:22 one, we commended Walmart
0:38:25 and two, everyone’s gonna follow suit now.
0:38:26 And that is exactly what happened.
0:38:29 Target eventually decided to follow up
0:38:31 and they offered their own discounts,
0:38:33 but it looks like it was too late.
0:38:35 And you almost have to give credit to Walmart
0:38:37 for being so bold on pricing
0:38:39 and recognizing that the most important thing
0:38:42 is the foot traffic and the trust of their customers.
0:38:43 As they said, fuck it,
0:38:46 we’re gonna reduce prices before anyone else does.
0:38:50 And it seems to have really paid off in this quarter at least.
0:38:52 So those are my two standouts
0:38:54 in terms of Walmart’s performance.
0:38:55 Perhaps you have some other observations
0:38:57 on what they’ve done well.
0:39:00 – So this guy, Bruce Buchanan, an economist at Stern,
0:39:01 taught me a framework
0:39:02 that has just kind of changed the way
0:39:04 I look at shareholder value.
0:39:05 And that is all shareholder value
0:39:08 comes down to the relationship
0:39:11 or the geometry between three lines.
0:39:13 The top line is perceived value.
0:39:15 The middle line is the price you charge
0:39:18 and the bottom line is the cost.
0:39:20 And there’s only two ways to create shareholder value.
0:39:22 You either increase perceived value,
0:39:25 better merchandising, better branding,
0:39:26 association of innovation.
0:39:28 And then if perceived value goes up,
0:39:29 you can have a lot of fun.
0:39:31 You can either raise the price you’re charging,
0:39:32 which creates greater margins
0:39:35 because the delta between your costs and the price go up.
0:39:37 Or you can leave the price the same
0:39:39 and you should expand market share
0:39:41 ’cause the delta between the price you’re charging
0:39:43 and the perceived value goes up,
0:39:46 increasing the value to the consumer
0:39:48 and your market share goes up.
0:39:51 Now, the majority of shareholder value, I would argue,
0:39:55 is around pushing the top line, the perceived value up, right?
0:39:58 Great spokesperson, Tiger Williams or a great ad campaign,
0:40:00 or we are the best, you know,
0:40:03 we are tightly associated with this brave new future of AI,
0:40:06 so we get a ton of traffic, open AI,
0:40:08 and we can raise our prices.
0:40:11 What Walmart has done is they brought in this gestalt
0:40:15 that every day we’re trying to push down the cost line
0:40:19 and then immediately, as soon as we’re able to pull it down,
0:40:23 we pull down the price line that we charge consumers.
0:40:26 We pass on those cost savings to the consumer immediately,
0:40:29 thereby increasing the delta between our prices
0:40:31 and our perceived value, which should expand share,
0:40:33 which is exactly what happened here.
0:40:35 And the problem is, I’ve always told kids
0:40:36 coming out of business school,
0:40:39 you wanna have a bias towards a company doing this,
0:40:41 increasing perceived value,
0:40:44 because when you’re in the business of pushing down the line,
0:40:48 it’s purely a business of operations and scale.
0:40:52 Doug McMillan can make multi-billion dollar investments
0:40:54 in technology that may or may not pay off
0:40:56 to try and get cost down 10 bibs.
0:40:58 He can make staggering investments.
0:41:01 You see the same dynamic at Uber and Lyft.
0:41:03 The number one player has the scale
0:41:06 where they can just make more bets.
0:41:08 And in this instance, when you’re in the business
0:41:10 of pushing the line down with your Dell,
0:41:12 with your Home Depot, with your Walmart,
0:41:15 it’s a business of scale and operations.
0:41:18 And right now, both of those things go to the market leader.
0:41:20 And the number two, quite frankly,
0:41:25 is just feeling the pain of how much it hurts,
0:41:29 one 15th of the market cap to be the number two.
0:41:31 We’ll be right back after the break
0:41:33 with a look at Comcast’s spin-off.
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0:44:34 We’re back with Prof2Markets.
0:44:35 It’s official.
0:44:37 Comcast is finally cutting the cord.
0:44:40 The company is spinning off several of its cable TV networks
0:44:42 to make it official.
0:44:44 The company is spinning off several of its cable TV networks
0:44:48 into a new public entity, temporarily named Spinco.
0:44:54 This new company will include MSNBC, CNBC, USA, Oxygen,
0:44:56 eSci-Fi and the Gulf Channel.
0:45:00 However, key assets like NBC, Bravo and Streaming Platform,
0:45:04 Peacock will remain under the Comcast umbrella.
0:45:07 So Scott, you predicted this.
0:45:11 This is a clip from September of 2023.
0:45:14 Let’s play it.
0:45:16 There needs to be recognition that cable TV assets
0:45:18 are no longer teenagers that are going to keep growing,
0:45:21 that they’re in fact, you know, Nana and Pop-Up
0:45:23 and need to be made comfortable.
0:45:24 These things are dying.
0:45:27 And they need to be managed for cash flow,
0:45:30 not starved of investment, but stop the hallucination
0:45:33 that these things are ever going to reignite growth again.
0:45:37 So my prediction is you’re going to see one or more players
0:45:39 shed their assets into a different hold code
0:45:44 to clean up their story, and also for consolidation and scale.
0:45:47 There needs to be a bunch of these things wrapped together.
0:45:50 So there’s one sales rep in Chakrasavaki selling ads
0:45:52 on the Cartoon Network or what have you.
0:45:56 And Unmuck, or, you know, Unfuck the story that
0:45:59 is media companies now that have growth,
0:46:04 but also have declining assets in the same portfolio.
0:46:07 I just want to say I can feel you smiling
0:46:10 on the other side of the screen.
0:46:13 I add, let’s be honest, I’m touching my nipples.
0:46:20 This is the most turned on I have been.
0:46:22 I mean, granted, I don’t own a single fucking coin,
0:46:24 and I keep waiting for Nvidia to go back
0:46:27 to 10 bucks a share, but let’s be honest,
0:46:29 the dog is howling on this one.
0:46:32 The dog is howling.
0:46:36 Yeah, this was, look, this was obvious.
0:46:40 And effectively what you have is when you mismatch families
0:46:42 of different generations under one stock ticker,
0:46:45 you have good assets that are growing in the market values
0:46:49 as growth or as consumers not on cash flow.
0:46:50 And then you have shitty businesses
0:46:55 that are declining, but still produce cash flow.
0:46:56 Investors in the market don’t know what to do.
0:46:58 So what they do is they find the shittiest assets
0:47:00 trading at the lowest multiple, and they assign
0:47:02 that entire multiple to the whole thing.
0:47:07 So the divestiture of assets in different sort of stages
0:47:09 of the life cycle here creates more clarity
0:47:11 and ultimately creates a whole that’s greater
0:47:12 than the sum of its parts.
0:47:16 So the disposition or clarity around a brand architecture
0:47:18 that spins these low performing or declining,
0:47:21 but high cash flow assets into a separate company
0:47:22 is a very good idea.
0:47:26 And then they will have their own currency to go buy ABC
0:47:30 or Bravo Five or CNN because everyone,
0:47:34 whether it’s Iger or Zaslaw is in the same position.
0:47:36 And that is they have some amazing assets
0:47:38 that would be valued at X and they have other assets
0:47:40 that are valued at 0.3 X.
0:47:44 So the market assigns that 0.3 to their entire portfolio.
0:47:46 This is a good move.
0:47:49 It will be used potentially as a shell company to go
0:47:52 and acquire other declining but high cash flow assets.
0:47:55 And I remind people that the second best investment
0:47:58 I ever made was in a yellow pages company.
0:48:00 And it was very simple.
0:48:02 We knew these things were going away.
0:48:06 They were declining at seven to 12% a year.
0:48:08 But there’s still a lot of people
0:48:10 that want that big fat fucking book
0:48:13 delivered to their home and rural wherever
0:48:14 in case they need a plumber
0:48:16 and they still have a dial up phone.
0:48:19 And these businesses still spend a lot of cash flow.
0:48:22 And what we would do is go buy the biggest yellow pages
0:48:25 company in the Southeast and say, okay, you’re fucked.
0:48:25 We’re fucked.
0:48:27 Let’s be fucked together.
0:48:29 And the way we’ll do this is we’ll take
0:48:32 your 10% of your best salespeople.
0:48:35 We’re going to lay off your entire administrative staff.
0:48:37 We’re going to close your headquarters now.
0:48:40 And as long as we can cut costs faster
0:48:42 than the revenue declines based on consolidation
0:48:45 and the fact we can pick these assets up on the cheap
0:48:49 every year this company increased its cash flow.
0:48:51 And this specific company then took a lot of that cash flow
0:48:55 and started trying to transition to a CRM software company
0:48:57 and actually did it quite well.
0:49:02 But consolidation of mature or declining assets
0:49:03 can be a great business
0:49:06 because typically these businesses don’t go away
0:49:09 as quickly as you think they’re going to.
0:49:11 And as long as you take sort of a private equity
0:49:14 cost cutting approach and stop trying to inject Botox
0:49:17 and filler into this thing such that under the illusion
0:49:20 it’s going to look young again, it’s not going to.
0:49:22 – So just on your point about depressed valuation.
0:49:25 So if we look at how much revenue these assets
0:49:27 actually generated for Comcast,
0:49:30 it comes out to around $7 billion.
0:49:33 Now we don’t know what the profitability is exactly.
0:49:35 I think we can assume it’s, it is quite profitable
0:49:38 but there are public companies out there
0:49:40 that are quite similar to this business.
0:49:43 And the example we could use is Fox Corporation
0:49:46 which has a price to sales multiple of one and a half.
0:49:48 So if we were to apply the same multiple
0:49:51 this segment is probably worth $10 and a half billion.
0:49:54 And you compare that to the overall market cap of Comcast
0:49:57 which is more than 160 billion.
0:50:01 So Wall Street hates cable in the same way
0:50:03 that they hated Yellow Pages.
0:50:08 My question to you though from an investing perspective,
0:50:14 you said that Yellow Pages was one of your best investments.
0:50:17 What made it so good?
0:50:22 Did you sell your stake at some point at a higher price?
0:50:25 Or was it the fact that cash flows were high
0:50:27 and you were receiving direct income?
0:50:29 What made it such a good investment?
0:50:30 – So I invested in the company
0:50:32 probably the better part of 10 years ago
0:50:35 and you could for a dollar in cash flow,
0:50:39 you had to spend two and a half dollars on a company.
0:50:41 And so we knew these companies were going out of business
0:50:43 but they weren’t going out of business in 30 months.
0:50:47 So within three years, the company just in cash flow
0:50:50 could return all of the initial investment to the investors.
0:50:51 – Wow.
0:50:52 – And this is what it comes right down to.
0:50:54 It’s very similar, everything replicates nature
0:50:56 or human interaction.
0:50:59 And that is if you have the chance,
0:51:01 I’m going to F1 because I want to hang out
0:51:05 with hot young people or hot successful people.
0:51:08 I am not going to, I don’t know,
0:51:09 the Golden Girls reunion.
0:51:11 I don’t want to hang out with old people.
0:51:16 And we are attracted to youth and vigor and growth.
0:51:19 And so these young vigorous growing companies
0:51:20 get an enormous multiple
0:51:23 ’cause we all want to hang out with them, right?
0:51:25 So they trade a much higher multiples.
0:51:28 And if you look at the most successful businesses
0:51:31 in terms of likelihood of success from startup,
0:51:35 the average is 14%, only one out of seven companies survives
0:51:38 but 90 plus percent is senior care homes.
0:51:40 If you’re willing to go into the business
0:51:43 of taking care of seniors,
0:51:45 nine out of 10 of these businesses work
0:51:46 but there’s an absence of capital
0:51:49 because they’re not as fun or sexy, they’re not growing.
0:51:52 People don’t like to be around old people.
0:51:54 It’s the same with distressed assets.
0:51:56 Everybody wants to hang out with open AI.
0:51:58 Everybody wants to hang out with NVIDIA.
0:52:00 They don’t want to be in distressed assets.
0:52:02 So if you go up and down the stack
0:52:07 from angel, to venture, to IPO’s, to growth, to mature,
0:52:11 to declining, to distressed, hands down,
0:52:13 the most successful, greatest likelihood of success
0:52:16 I found in the stack in terms of a capital
0:52:20 or an asset around the lifestyle, it’s distressed
0:52:24 because you can pick up shit at pennies on the dollar.
0:52:26 – I guess it’s interesting to me.
0:52:29 I mean, I consider, I think that I think
0:52:32 like a value investor, I think I’m a value investor.
0:52:34 And I guess the thing that I’ve always felt
0:52:37 with distressed assets is it feels as though
0:52:40 what you have to do is you’re getting a really good price
0:52:42 and you’re buying at a really good price
0:52:43 but then what do you do with it?
0:52:45 You’re sitting with this pile of shit
0:52:48 that you could make look a little bit less
0:52:50 like a pile of shit and my assumption has always been,
0:52:52 okay, well, you just got to flip it at some point.
0:52:54 But what’s interesting about what you described
0:52:56 with the yellow pages is actually
0:52:59 it was a good long-term investment
0:53:01 because of how profitable it was
0:53:03 and because you could use those profits
0:53:07 to then revitalize the company and turn it into a CRM
0:53:10 which is far more sustainable over the long term
0:53:12 than what it was before.
0:53:15 And so I want to continue with this yellow pages analogy
0:53:16 because I think it’s a good one.
0:53:20 What do you think the makeover looks like
0:53:25 for MSNBC and CNBC and SyFY and all of these channels?
0:53:31 What does the CRMification of this spinco,
0:53:33 how will that play out, do you think?
0:53:35 – I don’t have a vision for a new business
0:53:37 that they could pour their cash flow into
0:53:39 to turn this to pivot this company.
0:53:42 And also you don’t need to do that
0:53:44 because these companies,
0:53:47 there’s just going to be a lot of people watching CNBC
0:53:50 and Andrew Ross Orkin who is an extraordinary journalist
0:53:53 and Joe Kiernan who is not.
0:53:56 They are going to be watching these things for a long time
0:53:58 and there’s still going to be advertisers
0:54:01 that want to reach people who are 70, right?
0:54:05 Average age of an MSNBC viewer.
0:54:08 The conversations, and I know this firsthand happening
0:54:10 with all of these anchors is the following.
0:54:14 Chris Wallace, we love you, you’re iconic.
0:54:15 You’re fantastic.
0:54:19 Last year, when we were trying to convince ourselves
0:54:22 we could inject Botox and filler into our face
0:54:25 and we had this idea for CNN Plus
0:54:26 and we wanted to take you from Fox,
0:54:28 we offered you a four or five year deal at eight million
0:54:29 a year, that’s what I’ve read.
0:54:32 I would bet they said, we love you, you’re great.
0:54:34 We’re willing to pay you a million bucks a year.
0:54:38 The salary cuts, the cost cutting,
0:54:42 we did an analysis of how many people we need
0:54:44 at this podcast.
0:54:46 We’re getting like triple or quadruple
0:54:48 the number of viewers per person than these big firms.
0:54:51 These firms all roads lead to the same place.
0:54:56 The anchors here are pilots for Pan Am in the 70s.
0:55:00 They’re banging stewardesses, they’re high prestige,
0:55:01 but they know the writing’s on the wall.
0:55:03 They’re going to be making $68,000
0:55:06 working for Spirit Airlines going from Louisiana
0:55:08 to Asheville pretty soon.
0:55:12 Even if they don’t find another thing,
0:55:13 these companies, as long as they keep acquiring
0:55:16 and consolidating and cutting costs, which they will do,
0:55:20 they will figure out a way to return all of that capital
0:55:21 to shareholders really quickly
0:55:24 ’cause the share price will be low to buy in
0:55:25 and they’ll make really good money.
0:55:28 I would actually rather, I think I’d rather invest
0:55:31 in this spinco than in the core Comcast
0:55:33 because it’ll be at a lower valuation.
0:55:35 There’s a lot of properties.
0:55:38 Hey, Bob, are you ready to finally sell your shit to us?
0:55:41 We’ll take it, we’ll take it off your hands.
0:55:43 We’ll pay you an awful price,
0:55:45 but your stock price will go up
0:55:48 because the market will be focused on your parks
0:55:50 and on Disney Plus, which are great businesses,
0:55:54 instead of constantly asking you about ESPN and ABC
0:55:57 and you having to apologize for it every three months.
0:55:58 – I love it.
0:56:00 Let’s put a consortium together, take a majority stake,
0:56:01 and let’s call it–
0:56:02 – Doggo.
0:56:03 – Let’s call it Doggo.
0:56:04 – Doggo.
0:56:05 (laughing)
0:56:06 Let’s take a look at the week ahead.
0:56:10 We’ll see earnings from Dell, CrowdStrike, and HP.
0:56:12 And we’ll also see the Personal Consumption
0:56:14 Expenditures Index for October.
0:56:16 Sounds like a fascinating week.
0:56:17 Scott, any predictions?
0:56:20 – The biggest LBO in history is gonna happen in 2025.
0:56:24 And there’s a ton of capital on the sidelines.
0:56:25 Some stuff is getting cheap.
0:56:27 Great iconic companies is getting cheap.
0:56:31 And my bets, two of my favorite candidates
0:56:34 are now Intel and Tarjay.
0:56:35 – And just before we go, we’ll be recording
0:56:38 and ask me anything episode at the end of the year.
0:56:40 So please send in your questions for me and Scott
0:56:43 to officeours@profgmedia.com
0:56:46 or you can tag us on social media @profgpod
0:56:49 or you can leave us a comment on our YouTube channel.
0:56:50 Anything is fair game.
0:56:51 Send us your questions.
0:56:55 This episode was produced by Claire Miller
0:56:57 and engineered by Benjamin Spencer,
0:56:59 our associate producer is Alison Weiss.
0:57:00 Mia Silverio is our research lead,
0:57:02 Jessica Lange is our research associate,
0:57:04 Drew Burroughs is our technical director
0:57:06 and Catherine Dillon is our executive producer.
0:57:08 Thank you for listening to Prodigy Markets
0:57:10 from the Vox Media Podcast Network.
0:57:12 If you like what you heard, give us a follow
0:57:15 and join us for a fresh take on markets on Monday.
0:57:21 ♪ Lifetimes ♪
0:57:29 ♪ You held me ♪
0:57:34 ♪ In kind reunion ♪
0:57:41 ♪ As the world turns ♪
0:57:46 ♪ And the dark lies ♪
0:57:48 ♪ In love ♪
0:57:51 (upbeat music)
0:57:57 And I think what’s happened with Target,
0:58:00 hold on.
0:58:01 Yeah.
0:58:06 Hello, hola, hola, por favor,
0:58:09 vende tras en una hora, por favor.
0:58:11 Okay, gracias.
0:58:16 Oh, a little cosmopolitan skill from El Pato.
0:58:17 That’s right, that’s right.
0:58:18 Anyways, okay.
0:58:19 Where were we?
0:58:21 Otage.
0:58:24 Support for this episode comes from AWS.
0:58:26 AWS Generative AI gives you the tools
0:58:28 to power your business forward
0:58:29 with the security and speed
0:58:32 of the world’s most experienced cloud.
0:58:36 Food and security still affects millions of individuals
0:58:37 around the globe.
0:58:40 And Nestle, a global leader in nutrition, health,
0:58:42 and wellness, understands the importance
0:58:45 of working together to create lasting change.
0:58:48 Nestle’s partnerships extend beyond just financial support
0:58:49 from building urban hoop houses
0:58:52 to producing custom seasoning for food banks.
0:58:54 Nestle and their partners actively engage
0:58:56 with local communities, listening to their needs,
0:58:59 and working together to find innovative solutions.
0:59:01 Nestle is committed to helping support thriving,
0:59:05 resilient communities today and for generations to come.
0:59:07 Together, we can help to build stronger,
0:59:09 healthier communities.
0:59:10 Learn more at Nestle.com.
0:59:13 (upbeat music)

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0:00:58 For over 30 years,
0:01:00 XPRIZE has been the global leader
0:01:02 in designing and executing large-scale
0:01:04 incentivized competitions.
0:01:06 And through these competitions,
0:01:07 they’ve accelerated solutions
0:01:10 to some of the world’s greatest challenges,
0:01:13 such as climate change, water scarcity, and healthy aging,
0:01:15 just to name a few.
0:01:18 XPRIZE is a catalyst for radical breakthroughs
0:01:20 that have impacted the lives of millions,
0:01:22 and they’re just getting started.
0:01:24 Through the power of incentivized competition,
0:01:27 XPRIZE can drive scientific discovery,
0:01:30 cutting-edge innovation, and groundbreaking solutions.
0:01:33 The future is still ours to create.
0:01:37 Head to XPRIZE.org to learn how you could help architect
0:01:39 a future of equitable abundance.
0:01:47 I’m Scott Galloway, and this is No Mercy, No Malice.
0:01:51 Formula One may be the future of sports and media,
0:01:54 but it’s not without some speed bumps.
0:01:59 F1 is at an inflection point, as read by George Hahn.
0:02:07 Just as my obsession with relevance
0:02:10 and economic security have often crowded out
0:02:13 what’s really important, relationships,
0:02:16 I’ve let my preoccupation with the election results
0:02:19 crowd out the blessings in my life.
0:02:21 God, I’m so fucking sick of politics.
0:02:26 So let’s talk about cars, fast cars.
0:02:29 I’m in Vegas for Formula One.
0:02:33 Actually, the truth is I’m not here for the race.
0:02:36 It’s more a desperate attempt to avoid the inevitable melt
0:02:39 into irrelevance, which I believe can be arrested
0:02:40 by extending my adolescence.
0:02:43 Also, I love Vegas.
0:02:45 The last race I went to was the inaugural
0:02:48 Miami Grand Prix in 2022.
0:02:52 It was a great time, despite F1 races being boring.
0:02:54 Here he comes, there he goes,
0:02:58 and so on, and so on, and so on.
0:03:02 The real fun is found far from the track.
0:03:05 The vibe is money, tech, and glamour,
0:03:07 a Super Bowl for the super rich.
0:03:12 If NASCAR is Android, F1 is iOS.
0:03:16 In Miami, I went to a dinner party on the beach
0:03:19 hosted by Carbone, a fabulous restaurant
0:03:24 right in the middle of a COVID flare-up, Fab U. Luss.
0:03:29 Wyclef Jean played to 700 people crowded into a hot tent
0:03:31 with no ventilation.
0:03:32 I had two thoughts.
0:03:36 I’m getting COVID tonight and it’s worth it.
0:03:37 I was right on both counts.
0:03:42 F1 has long had large and rabid fan bases
0:03:44 in Europe and South America,
0:03:49 but that enthusiasm didn’t land on U.S. shores until 2017
0:03:52 when Liberty Media bought a controlling interest
0:03:54 in the league.
0:03:59 Under new boss Greg Mafay, F1 took a big swing at America.
0:04:03 Targeting young people, Mafay and the F1 team
0:04:07 built an iconic brand in the most competitive market
0:04:09 in less than a decade.
0:04:12 There were races with celebrities in attendance,
0:04:15 Tom Cruise, LeBron James, Rihanna,
0:04:19 new sponsorships, and an aggressive social media presence.
0:04:22 However, Liberty’s gangster move
0:04:27 was the Netflix docu-series Drive to Survive.
0:04:30 Now in its sixth season,
0:04:31 the show is rewriting the playbook
0:04:35 regarding how sports leagues market themselves.
0:04:38 It’s a behind-the-scenes look at a lot of young,
0:04:42 good-looking guys, as Mafay once told CNBC,
0:04:45 hard-charging billionaire team owners
0:04:48 and high-tech pit crews competing in a series
0:04:51 of UberLux international locations.
0:04:54 F1 wasn’t the first to try this.
0:04:58 The NFL’s Hard Knocks premiered on HBO back in 2001.
0:05:01 By focusing on individuals
0:05:03 and harnessing the power of storytelling,
0:05:08 Drive to Survive used streaming to introduce U.S. viewers
0:05:11 to drivers who were superstars overseas.
0:05:15 Among them, Lewis Hamilton and Max Verstappen.
0:05:19 It gave newbie, Reed, American fans,
0:05:20 a compelling point of entry
0:05:23 and became a fount of bingeable video
0:05:27 that was easily shared, particularly on Instagram.
0:05:30 There are accounts devoted to what Hamilton wears
0:05:32 as he walks on red carpets.
0:05:36 Tribal rivalries, betrayal, greed, revenge,
0:05:39 all the stuff humans are hardwired to love
0:05:42 in a lustrous package every week.
0:05:46 Champions muse about having a target on my back.
0:05:50 Young guns talk about being hungry.
0:05:53 Everybody obsesses about forces beyond their control.
0:05:56 Shakespeare knew this turf pretty well.
0:05:59 Marcus Aurelius would have felt at home.
0:06:01 The song remains the same.
0:06:05 The actual game being played is unimportant.
0:06:06 The results?
0:06:11 Liberty paid $4.6 billion for F1.
0:06:15 It now has a market cap of about $22 billion.
0:06:21 In 2023, F1 generated about $3.2 billion in revenue,
0:06:25 up from 2.6 the year before.
0:06:28 Most of it from promotional deals with host cities,
0:06:31 media rights and team sponsorships.
0:06:35 TV viewership has doubled since Liberty took over,
0:06:37 though the U.S. audience pales
0:06:40 besides those of the NFL and other big team sports,
0:06:43 and it’s only a third of NASCARs.
0:06:47 In 2022, F1 signed a three-year deal with the SPN,
0:06:51 up for renewal next year, worth $270 million.
0:06:55 American TV viewership of this year’s Miami Grand Prix
0:07:00 was 3.1 million, the largest ever for a U.S. race.
0:07:04 Meanwhile, between 2017 and 2021,
0:07:09 the average age of an F1 fan dropped from 36 to 32.
0:07:15 About 40% of fans are now female.
0:07:17 Earlier this year, Liberty announced
0:07:20 it had bought a majority interest in MotoGP,
0:07:24 which is to motorcycle racing what F1 is to autos.
0:07:29 Owning a team, F1 has 10, used to be a money pit
0:07:31 for a brand or a billionaire
0:07:33 in the throes of a mid-life crisis.
0:07:37 Now teams are a legitimate asset class.
0:07:41 Oracle is paying Red Bull $100 million
0:07:43 to put its name on their car.
0:07:48 Mercedes paid $176 million for its team in 2010.
0:07:53 It’s now worth $1.5 million.
0:07:57 The Phoenix Suns and Chelsea FC were recently purchased
0:08:02 for $4 billion and $5.3 billion, respectively.
0:08:07 So, media, tech, increasing value, and why Clefjean?
0:08:11 Everybody’s happy, right?
0:08:12 Sort of.
0:08:16 The mood in Vegas this year is subdued,
0:08:18 a bit chastened even.
0:08:22 For starters, the business face of all this success,
0:08:24 Mafe, is out.
0:08:27 His contract expires at the end of this year
0:08:29 and Liberty announced he’ll be leaving
0:08:34 to be replaced temporarily by Chairman John Malone.
0:08:36 Malone is brighter than me,
0:08:39 but that won’t stop me from making the following assertion.
0:08:44 He retired/fired the wrong guy.
0:08:47 Mafe has doubled Liberty’s shareholder value
0:08:50 in the past 12 months and received comp,
0:08:54 averaging $25 million per year.
0:08:59 David Zaslov has been paid an average of $115 million
0:09:02 for the last three years to destroy
0:09:05 two-thirds of Warner Brothers Discovery’s shareholder value.
0:09:09 Mafe says he’s ready for something new.
0:09:11 Liberty thanked him and said 2024
0:09:15 made a fitting capstone to his brilliant tenure.
0:09:17 Who knows what really happened?
0:09:20 Liberty is also restructuring assets with spin-offs
0:09:22 to tell a cleaner story.
0:09:24 Maybe Mafe didn’t want to drive a smaller car
0:09:25 or didn’t want to deal with
0:09:29 the Department of Justice’s antitrust investigation.
0:09:32 It’s looking into F1’s rejection of a proposed new team
0:09:35 from retired driver Michael Andretti.
0:09:39 Maybe a sale of F1 is looming, Liberty says it’s not.
0:09:41 Or none or all of the above.
0:09:42 Whatever the reason,
0:09:46 Mafe leaves a sport that, while still thriving,
0:09:48 is at an inflection point.
0:09:52 Last year’s much-hyped Vegas Grand Prix
0:09:54 was something of a shit show.
0:09:57 Race fans complained that prices were crazy
0:09:59 and getting around the event was difficult.
0:10:02 Drivers complained about the track.
0:10:04 Casinos, bars, and restaurants
0:10:05 complained about disruption.
0:10:10 US Grand Prix sites, with a few exceptions,
0:10:11 don’t have the infrastructure
0:10:15 that European and South American sites do.
0:10:18 Courses, grandstands, and other structures
0:10:21 tend to be ad hoc affairs.
0:10:23 Fans watching at home have complained
0:10:27 about glitchy streams on ESPN+ and other services.
0:10:31 Meanwhile, F1 still hasn’t completely shaken the funk
0:10:34 of last season’s uncompetitive races,
0:10:37 which wafted into 2024.
0:10:40 Max Verstappen won so many,
0:10:43 seven of the first 10 this year,
0:10:45 that a lot of bored fans tapped out,
0:10:48 and TV viewership and social media engagement
0:10:50 have sagged.
0:10:52 It all feels very 1990,
0:10:55 when Pete Sampras was so dominant and boring
0:10:58 that people felt he’d ruined tennis.
0:11:02 Seasoned race fans point out that periods of dominance
0:11:06 by a hot driver have always been part of the sport.
0:11:08 Think Michael Schumacher.
0:11:10 And it was just a matter of time
0:11:13 until the other teams figured out how to take him on,
0:11:16 which seems to have happened recently.
0:11:19 While Verstappen is a locked-to-win driver of the year
0:11:21 for a fourth time,
0:11:24 competition for the team championship
0:11:26 has gotten much livelier.
0:11:30 The downturn, though, highlights two weaknesses.
0:11:33 While F1’s marketing has been brilliant,
0:11:36 it has had trouble providing, one,
0:11:39 a consistently great product like high excitement,
0:11:42 competitive races, and two,
0:11:46 a consistently great experience at an affordable price
0:11:49 for fans who aren’t wealthy.
0:11:53 F1 must balance its luxe, aspirational vibe
0:11:57 with a simple fact, most auto racing fans are not rich.
0:12:02 A fan on a budget would have to spend at least $2,200
0:12:05 for a Bare Bones Vegas Grand Prix weekend.
0:12:07 Given last year’s fiasco,
0:12:09 it’s not surprising that hotel prices
0:12:11 are way off this year.
0:12:14 The hardest things in business
0:12:17 are pricing and compensation.
0:12:19 F1 blew the pricing.
0:12:24 Wimbledon’s center court has a capacity of 15,000
0:12:27 and seats there average $200.
0:12:32 The seating capacity at F1 Vegas last year was 100,000
0:12:37 and grandstand tickets were $2,500.
0:12:40 It may have set a record for the worst demand
0:12:42 slash elasticity forecasting
0:12:45 of any event its size in history.
0:12:49 I am not, as I said, into racing,
0:12:51 so I don’t know what kind of rule
0:12:54 or organizational changes F1 needs
0:12:56 to make it harder for another Verstappen
0:12:58 to dominate and kill viewership.
0:13:02 A secret to the NFL success is a draft system
0:13:06 that helps keep all teams somewhat competitive.
0:13:11 In the last five years, 94% of NFL teams
0:13:13 have appeared in the playoffs.
0:13:17 Similarly, in an attempt to maintain some level of parity,
0:13:21 F1 has implemented spending caps.
0:13:25 Also, F1 would be well-served to do more
0:13:27 to foster young U.S. talent
0:13:29 and produce a homegrown superstar.
0:13:32 At this year’s Brazil Grand Prix,
0:13:33 half of Argentina showed up
0:13:37 to watch Argentine driver Franco Colapinto.
0:13:38 American fans need someone
0:13:40 they can get that excited about.
0:13:44 Netflix could keep applying the drive
0:13:47 to survive formula to new sports,
0:13:50 going to teams and saying, pay us $100 million
0:13:52 and we’ll do two seasons of what it means
0:13:55 to play for the Boston Red Sox.
0:13:58 Or take a league in a second or third tier pro sport,
0:14:01 say pickleball or lacrosse,
0:14:03 to the next level at a lower price point.
0:14:06 Magazine publishers do this.
0:14:10 Their most profitable businesses are custom jobs,
0:14:13 like that Four Seasons magazine in your hotel room.
0:14:17 What is definitely going to happen though,
0:14:21 is that sports teams are going to keep increasing in value,
0:14:25 even though they’re shitty businesses in terms of cash flow.
0:14:28 Most of them will lose money every year.
0:14:32 Then in a few years, they’ll sell at extraordinary multiples
0:14:35 to the next generation of men in their 60s,
0:14:38 still trying to impress their dads.
0:14:44 However well or badly F1 handles the bumps it’s hitting now,
0:14:46 what it has done with Netflix
0:14:50 may become the default sports media model.
0:14:52 You’re going to start to see media businesses,
0:14:56 celebrities and streaming companies come together
0:14:59 to build sports entertainment enterprises.
0:15:04 Imagine Tom Cruise and Disney not buying the Anaheim Ducks,
0:15:06 but an entire league.
0:15:09 There’s something more here.
0:15:15 One in seven men can’t name a single friend,
0:15:19 and one in four can’t name a best friend.
0:15:25 The Premier League, the NFL and F1 give men license
0:15:30 to bond and express emotions in a safe place.
0:15:32 In addition, these events happen
0:15:35 in the most wonderful venues ever constructed,
0:15:38 not on a fucking screen.
0:15:42 We are a social and emotional species,
0:15:46 and being part of a collective watching people with speed,
0:15:50 strength and alien-like instincts compete,
0:15:51 puts us in the moment.
0:15:55 I’ll be at F1 this weekend,
0:15:58 and for a few moments, I’ll be in that moment.
0:16:02 Pardoned from the past where my anger and depression
0:16:04 won’t let me forgive myself,
0:16:06 and distracted from the future
0:16:09 where I’m focused on garnering more relevance and money,
0:16:13 I’ll be there, watching the collision of men,
0:16:16 machines, technology and culture.
0:16:22 But more than anything, I’ll just be there.
0:16:26 Life is so rich.
0:16:41 Support for this episode comes from AWS.
0:16:44 AWS Generative AI gives you the tools
0:16:46 to power your business forward
0:16:47 with the security and speed
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0:17:25 (upbeat music)

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0:01:23 Thumbtack presents the ins and outs of caring for your home.
0:01:26 Out, procrastination,
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0:01:33 In, plans and guides that make it easy
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0:01:57 Episode 326, 326 is the area code serving southwest in Ohio.
0:02:00 In 1926, the first SATs took place.
0:02:03 Latest exam for me, a prostate exam.
0:02:05 My doctor told me it’s perfectly normal
0:02:08 to become aroused and even ejaculate.
0:02:12 That being said, I still wish he hadn’t.
0:02:18 Go, go, go.
0:02:21 (upbeat music)
0:02:26 – Welcome to the 326th episode of The Prop G Bot.
0:02:28 In today’s episode, we speak with Eric Schmidt,
0:02:30 a technologist, entrepreneur, and philanthropist.
0:02:32 He also previously served as Google’s
0:02:33 chief executive officer.
0:02:34 I don’t know if you’ve heard of him.
0:02:35 It’s a tech company.
0:02:37 You can actually go there and type in your own name
0:02:39 and you see what the world thinks of you.
0:02:42 Later, he was the executive chairman and technical advisor.
0:02:44 We discussed with Eric the dangers
0:02:47 and opportunities AI presents in his latest book,
0:02:49 “Genesis, Artificial Training.”
0:02:51 “Genesis, Artificial Intelligence,
0:02:53 Hope in the Human Spirit.”
0:02:55 Well, that sounds like a show
0:02:58 on the Hallmark channel in hell.
0:02:59 Okay, what’s happening?
0:03:02 Off to Vegas this week, I’ve been at Summit.
0:03:03 That’s beautiful here.
0:03:04 It’s lovely.
0:03:07 I love kind of the western Baja sky or light.
0:03:09 I think I may retire here.
0:03:11 When I retire in Mexico, I think the food’s amazing.
0:03:13 The people are just incredibly cool.
0:03:14 The service go, no joke,
0:03:18 think that Mexico’s the best vacation deal in the world.
0:03:20 Anyways, where am I headed to next?
0:03:21 I go to Vegas tonight.
0:03:24 Then know that you asked doing a talk there tomorrow.
0:03:26 Vegas turned the week, not so much fun.
0:03:27 Not so much fun.
0:03:30 That definitely kind of an unusual vibe there.
0:03:31 And then I go to LA for a couple of days.
0:03:33 Daddy will be at the Beverly Hills Hotel.
0:03:34 Swing by, stay high.
0:03:37 I’ll be the guy alone at the bar.
0:03:39 Oh, I love eating alone at the Polo Lounge.
0:03:40 How do you know if I like you?
0:03:42 I stare at your shoes and I’m mine.
0:03:45 Anyways, then I’m back to Vegas for Formula One,
0:03:47 which I am so excited about.
0:03:48 I love it.
0:03:49 The city comes alive.
0:03:51 And then, just ’cause I know you like to keep up
0:03:53 with my travels, I head to Sao Paulo,
0:03:54 where the nicest hotel in the world is right now.
0:03:56 I think the Rosewood and Sao Paulo.
0:03:59 I think Rosewood is actually the best brand
0:04:01 in high-end hospitality.
0:04:02 Isn’t that good to know?
0:04:04 A lot of insight here.
0:04:05 A lot of insight.
0:04:07 All right, let’s move on.
0:04:10 Some news in the media and entertainment space.
0:04:13 Netflix said that a record 60 million households worldwide
0:04:14 tuned in to watch the boxing match
0:04:15 between Jake Paul and Mike Todd.
0:04:17 I’m sorry.
0:04:18 I’m sorry.
0:04:19 Just a quick announcement.
0:04:21 This is very exciting.
0:04:24 I just struck a deal as I told you I’m going to LA.
0:04:26 And you’re the first to know that Hulu is announced
0:04:28 it’ll be live streaming a fight between me and Jimmy Carter.
0:04:29 (bell dings)
0:04:32 By the way, if you get paid $20 million,
0:04:33 I don’t know what Tyson was paid.
0:04:34 I think it was $20 million.
0:04:37 You have an obligation to either kick the shit out
0:04:39 of someone or have the shit kicked out of you.
0:04:42 This kind of jab snort through your nose
0:04:43 and just stay away from the guy.
0:04:44 I don’t buy it.
0:04:47 I want my $12 back Netflix.
0:04:50 Despite the disappointment in the fight,
0:04:53 Jake Paul did in fact defeat Mike Tyson in eight rounds.
0:04:54 Can you even call it a win?
0:04:56 Can you?
0:04:58 The fight was shown in over 6,000 bars and restaurants
0:04:59 across the U.S., breaking the record
0:05:03 for the biggest commercial distribution in the sport.
0:05:05 But the record numbers came with a few hiccups.
0:05:06 Viewers reported various tech issues,
0:05:10 including slow loading times, pixelated screens,
0:05:13 and a malfunctioning earpiece from one of the commentators.
0:05:14 That’s a weird one.
0:05:16 A malfunctioning earpiece from one of the commentators.
0:05:20 Data from Down Detector revealed that user reported out
0:05:21 it just peaked at more than 95,000
0:05:23 around 11 p.m. Eastern time.
0:05:25 Frustrated fans flooded social media,
0:05:28 criticizing Netflix for the poor streaming quality.
0:05:33 Netflix CTO Elizabeth Stone, soon to be probably former CTO,
0:05:34 wrote to employees, “I’m sure many of you
0:05:35 “have seen the chatter and the press
0:05:37 “and the social media about the quality issues.
0:05:39 “We don’t want to dismiss the poor experience
0:05:41 “of some members and know we have room for improvement,
0:05:43 “but still consider this event a huge success.”
0:05:47 No, there was a pretty big fuck up for you, Ms. Stone.
0:05:50 Specifically, Netflix tries to garner evaluation,
0:05:52 not of a media company, but of a tech company,
0:05:53 which means you’re actually supposed
0:05:54 to be pretty good at this shit.
0:05:56 And didn’t you know exactly how many people
0:05:57 were gonna show up for this?
0:06:00 Didn’t you kind of, weren’t you able to sort of estimate
0:06:03 pretty accurately just exactly how many people
0:06:05 would be dialing at exactly the same time
0:06:06 and then test the shit out of this?
0:06:09 You’re beginning to smell a little bit like Twitter
0:06:10 in a presidential announcement.
0:06:13 That just is unforgivable for a fucking tech company.
0:06:15 Come on, guys, this is what you do.
0:06:16 This isn’t the first time Netflix
0:06:17 has fumbled with a live event.
0:06:20 Last year, their Love Is Blind reunion show
0:06:21 faced a similar situation,
0:06:22 leaving viewers waiting over an hour
0:06:25 before a recorded version was made available.
0:06:27 And this brings up a bigger question.
0:06:29 With Netflix’s pushing to live sports,
0:06:31 including NFL game scheduled for Christmas
0:06:34 and a major deal with WWE starting next year,
0:06:36 can they deliver the kind of quality viewers expect
0:06:38 that they get from broadcast cable?
0:06:40 It looks like what’s old is new again
0:06:41 that we have taken for granted,
0:06:44 kind of the production quality of live TV
0:06:45 and how difficult it is.
0:06:49 That’s one thing I’ll say about Morning Joe or The View
0:06:51 or even I think Fox does a great,
0:06:53 they’re great at delivering TV live.
0:06:56 I think CNN also does a fantastic job.
0:06:57 Netflix isn’t alone.
0:07:00 Other streaming platforms including Comcast’s Peacock
0:07:02 have also been getting into live sports.
0:07:04 Earlier this year, Peacock’s January playoff game
0:07:06 between the Kansas City Chiefs and Miami Dolphins
0:07:08 drew 23 million viewers,
0:07:10 which broke records for internet usage in the US.
0:07:14 Get this, the game was responsible for 30%
0:07:15 of internet traffic that night.
0:07:16 That’s like squid games.
0:07:19 This is all proof that the market for live sports
0:07:21 on streaming platforms is a massive opportunity
0:07:23 and companies are willing to spend big.
0:07:24 According to the Wall Street Journal,
0:07:27 Netflix is paying around $75 million
0:07:28 for NFL game this season.
0:07:30 They also recently signed a 10 year,
0:07:31 $5 million deal with WWE.
0:07:35 It used to be that live in sports
0:07:38 were sort of the last walls to be breached
0:07:39 in broadcast cable.
0:07:40 Like we’ll always have sports.
0:07:42 And then the people with the cheapest capital
0:07:43 in the deepest pockets showed up and said,
0:07:45 “Hey, we’ll take Thursday night football.
0:07:48 Hey, we’ll take the Logan Paul or Jake Paul,
0:07:49 is it Jake or Logan?”
0:07:51 And I can’t remember, anyways.
0:07:54 I mean, literally broadcast cable television right now,
0:07:56 it’s like Mark Twain said about going bankrupt.
0:07:58 It was slowly then suddenly.
0:08:01 We’re in the suddenly stage of the decline
0:08:02 of linear ad supported TV.
0:08:06 It has gotten really bad in the last few months.
0:08:11 I had breakfast with the former CEO of CNN.
0:08:12 Who’s a lovely guy?
0:08:15 And he said that CNN’s viewership
0:08:17 versus the last election has been cut in half.
0:08:19 Can you imagine trying to explain to advertisers,
0:08:22 our viewership is off 50% since the last time
0:08:24 we were talking about election advertising.
0:08:29 My theory is that the unnatural unearned torrent of cash
0:08:31 at local news stations have been earning
0:08:33 for the last 20 years is about to go away.
0:08:34 And what are we talking about?
0:08:35 Scott, tell us more.
0:08:36 What are you saying?
0:08:38 Effectively, a lot of smart companies,
0:08:39 including I think Hearst and others
0:08:41 have gone around and bought up these local news stations.
0:08:42 And why?
0:08:43 ‘Cause they’re dying, aren’t they?
0:08:45 Well, yeah, they are.
0:08:46 But old people watch local news,
0:08:48 mostly to get the weather and local sports
0:08:51 because that Jerry Dumphy is just so likable
0:08:52 in that hot little number.
0:08:55 They always have some old guy with good hair
0:08:58 and broad shoulders who makes you feel comfortable and safe
0:09:00 and some hot woman in her 30s
0:09:04 who’s still waiting for the call up to do daytime TV.
0:09:08 And everybody, old people love this and old people vote.
0:09:09 Now what’s happening?
0:09:11 Okay, so the numbers are in.
0:09:13 A million people watch the best shows on MSNBC,
0:09:16 the average age is 70, it’s mostly white
0:09:17 and it’s mostly women.
0:09:18 So a 70 year old white woman.
0:09:20 Podcasts, 34 year old male.
0:09:21 Think about that.
0:09:23 Also the zeitgeist is different.
0:09:26 People go to cable news to sanctify their religion
0:09:27 or specifically their politics.
0:09:29 People come to podcasts to learn.
0:09:30 The zeitgeist is different.
0:09:34 We try to present our guests in a more aspirational light.
0:09:35 We’re not looking for a gotcha moment
0:09:36 to go live on TikTok.
0:09:38 It’s not, say a twist of phrase,
0:09:39 dead at done in six minutes
0:09:41 ’cause we got a break for an opioid induced constipation
0:09:43 commercial or life alert.
0:09:44 I’m following.
0:09:45 We don’t do that shit.
0:09:48 We sell zipper cruder and athletic greens
0:09:51 and thunder eyes and different kind of modern cool stuff
0:09:52 like that.
0:09:53 Also, Viori.
0:09:54 I’m wearing Viori shorts right now.
0:09:57 By the way, I fucking love this athleisure.
0:10:00 Oh my God, I look so good in this shit.
0:10:02 Actually, no one really looks good.
0:10:04 No man looks good in athleisure,
0:10:06 but I look less bad than I look in most athleisure.
0:10:08 I love the fabrics.
0:10:09 Not even getting paid to say this.
0:10:11 Wearing it right now.
0:10:13 So let’s talk a little bit about Netflix.
0:10:14 It’s up 81% year today.
0:10:16 True story, I bought Netflix at 10 bucks a share.
0:10:17 That’s a good news.
0:10:20 The bad news is I sold it at eight bucks a share
0:10:22 and now it’s at $840.
0:10:23 Daddy would be live broadcasting
0:10:25 from his own fucking Gulfstream right now.
0:10:26 Had I not been such a shit head,
0:10:29 I’m gonna find a time machine, get in it, go back,
0:10:31 find me, kill me and then kill myself.
0:10:34 Eight, Jesus, God.
0:10:37 Anyways, Amazon is up 34%.
0:10:38 I do own that stock.
0:10:39 Disney is up 22%.
0:10:40 My stock pick for 2024.
0:10:44 Warner Brothers Discovery down 22%.
0:10:47 Jesus Christ Malone, you fired the wrong guy, Paramount.
0:10:49 By the way, Zazloff, the guy who was overseeing
0:10:52 a destruction of about 60 or 70% of shareholder value
0:10:53 since he talked to much of stupid people
0:10:55 into why this merger made any fucking sense
0:10:57 and took on way too much debt.
0:11:00 He’s managed to pull out about a third of a billion dollars
0:11:01 despite destroying a massive amount
0:11:02 of shareholder value.
0:11:05 Paramount is down 28% year today.
0:11:07 Comcast is down 2.3%.
0:11:12 Comcast I think is arguably the best run of the cable folks.
0:11:13 Obviously not including Netflix,
0:11:16 which is just a gangster run company.
0:11:19 So Netflix has about 250 million users.
0:11:21 Amazon Prime Video has 200 million.
0:11:22 Is that fair though?
0:11:24 ‘Cause you just automatically get it with Prime.
0:11:27 Disney Plus 150 million.
0:11:29 Max 95.
0:11:33 I love Max, we sold our series into Netflix.
0:11:34 Our big tech drama.
0:11:38 I think most of us would have liked HBO
0:11:40 just ’cause HBO has a certain culture
0:11:42 that feeds kind of the water cooler.
0:11:45 You’re talking about something in streaming media.
0:11:47 You’re usually talking about something on Max
0:11:49 but Netflix has also got bigger reach.
0:11:51 These are good problems.
0:11:54 Hulu’s Paramount is at 63 million.
0:11:57 Hulu 49, Peacock 28.
0:12:02 ESPN Plus at 26, Apple TV at 25.
0:12:05 And then Stars, remember them at 16 million.
0:12:07 Effectively these guys have cheaper capital.
0:12:09 They’re absolutely killing linear TV.
0:12:11 Does that mean it’s a bad business now?
0:12:13 Someone’s gonna come in and roll up all of these assets
0:12:18 between the old Viacom assets, CNN, Turner,
0:12:22 all the Disney shit, ABC.
0:12:23 They’re gonna roll them all up.
0:12:26 Milk ’em for their cash flow, cut costs faster
0:12:28 than the revenue declines.
0:12:29 These businesses,
0:12:30 while they seem to be going out of business
0:12:33 pretty fast right now, it’ll probably level out.
0:12:35 AOL’s still a small but great business.
0:12:37 I think it does something like four or $500 million
0:12:38 in EBITDA ’cause there’s still a lot of people
0:12:40 that depend on AOL and rural areas
0:12:42 for their dial-up for their internet.
0:12:46 And some people will kind of hang in there, if you will.
0:12:48 But this is gonna be a distress play.
0:12:50 They’re gonna stop this consensual hallucination
0:12:52 that these things are gonna ever grow again.
0:12:54 They’ll consolidate them to start cutting costs.
0:12:57 One of the best investments I’ve ever made, yellow pages.
0:12:58 We bought a yellow pages company
0:13:01 for about two or two and a half times cash flow.
0:13:05 Yeah, it’s going down by eight to 12% a year.
0:13:06 But if you cut costs faster than that
0:13:09 by going and buying the other shitty yellow pages companies
0:13:10 and then consolidating the staff,
0:13:12 which is Latin for layoff people,
0:13:15 and you can cut costs faster than 8%,
0:13:17 you have an increase in EBITDA every year.
0:13:19 I still find across the entire asset class,
0:13:21 and this is where I’ll wrap up.
0:13:25 In general, a basic axiom that I have found holds water
0:13:26 through the test of time around investing,
0:13:29 is the sexier it is, the lower the ROI.
0:13:31 And if you look at asset classes
0:13:33 in terms of their sex appeal,
0:13:35 venture investing or angel investing is fun, right?
0:13:37 It’s for what I call FIPS,
0:13:39 formerly important people that wanna stay involved
0:13:40 and wanna help entrepreneurs.
0:13:42 But be clear, the only return you get is psychic.
0:13:45 It is a terrible asset class, even if something works.
0:13:48 And at that stage, it is very hard to predict.
0:13:51 You’re talking about one in seven, maybe, do well.
0:13:52 And even at one company,
0:13:54 likely you’ll get washed out along the way
0:13:56 at a little bump and the VCs have showed up
0:13:56 and they’ll wash you out.
0:13:59 It is a very tough asset class to make money.
0:14:02 Venture does better, but the majority of the returns
0:14:04 are not only crowded to a small number of brands
0:14:05 that get all the deal flow,
0:14:06 but a small number of partners
0:14:09 within that small number of firms.
0:14:11 And then you have growth, I think that’s better.
0:14:14 Then you have IPOs, unfortunately IPOs.
0:14:16 That winter is really ugly right now.
0:14:20 The IPO market’s basically been in a pretty big deep freeze
0:14:21 for several years now.
0:14:22 And people keep thinking it’s gonna come back.
0:14:25 We got excited about Reddit, but not a lot followed.
0:14:27 And then you go into public company stocks.
0:14:30 It’s impossible to pick stocks by an index fund.
0:14:31 Then you get into distressed
0:14:33 or mature companies, dividend plays.
0:14:35 And then what I love is distressed.
0:14:37 I find that distressed is the best asset class.
0:14:38 Why?
0:14:43 What business has the greatest likelihood of succeeding?
0:14:44 Anything in senior care.
0:14:45 Why?
0:14:46 Against the above, the less sexy it is.
0:14:48 People don’t wanna be around old people.
0:14:49 It reminds them of death.
0:14:50 They’re generally pretty boring.
0:14:51 I know I’m supposed to say
0:14:55 they just have so much experience and wisdom sometimes.
0:14:56 And people wanna avoid them.
0:14:58 People wanna hang out with hot young people, right?
0:15:00 And people wanna hang out with hot young companies,
0:15:03 specifically capital wants to hang out
0:15:05 with hot young growing companies.
0:15:06 And they don’t like the way
0:15:09 that old companies smell, so to speak.
0:15:10 So they avoid them.
0:15:12 And that’s why there’s a greater return
0:15:13 on investment in distressed.
0:15:15 What’s the learning here?
0:15:18 Sex appeal and ROI are inversely correlated.
0:15:20 So yeah, if you wanna invest
0:15:21 in a member’s club downtown
0:15:24 for the fashion industry and the music industry have at it,
0:15:28 but keep in mind ROI and sex appeal inversely correlated.
0:15:33 We’ll be right back for our conversation with Eric Schmidt.
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0:19:05 (upbeat music)
0:19:14 – Welcome back.
0:19:15 Here’s our conversation with Eric Schmidt,
0:19:17 a technologist, entrepreneur, philanthropist,
0:19:19 and Google former CEO.
0:19:24 Eric, where does this podcast find you?
0:19:25 – I’m in Boston.
0:19:28 I’m at Harvard and giving a speech to students later today.
0:19:30 – Oh, nice.
0:19:31 So let’s bust right into it.
0:19:33 You have a new book out that you co-authored
0:19:35 with the late Henry Kissinger titled
0:19:37 “Genesis, Artificial Intelligence,
0:19:40 “Hope, and the Human Spirit.”
0:19:41 What is it about this book?
0:19:44 Or give us what you would call the Pillars of Insight here
0:19:48 around that’ll help people understand the evolution of AI.
0:19:51 – Well, the world is full of stories about what AI can do.
0:19:54 And we generally agree with those.
0:19:58 What we believe, however, is the world is not ready for this.
0:20:00 And there are so many examples,
0:20:04 whether it’s trust, military power, deception,
0:20:07 economic power, the effect on humans,
0:20:12 the effect on children that are relatively poorly explored.
0:20:16 So the reader of this book doesn’t need to understand AI,
0:20:18 but they need to be worried
0:20:20 that this stuff is going to be unmanaged.
0:20:23 Dr. Kissinger was very concerned
0:20:26 that the future should not be left to people like myself.
0:20:30 He believed very strongly that these tools are so powerful
0:20:33 in terms of their effect on human society.
0:20:35 It was important that the decisions be made
0:20:37 by more than just the tech people.
0:20:40 And the book is really a discussion
0:20:43 about what happens to the structure of organizations,
0:20:46 the structure of jobs, the structure of power,
0:20:49 and all the things that people worry about.
0:20:54 I personally believe that this will happen much, much more
0:20:57 quickly than societies are ready for,
0:20:59 including in the United States and China.
0:21:02 It’s happening very fast.
0:21:04 – And what do you see as the real existential threats here?
0:21:07 Is it that it becomes sentient?
0:21:11 Is it misinformation, income inequality, loneliness?
0:21:14 What do you think are the kind of first and foremost
0:21:17 biggest concerns you have about this rapid evolution of AI?
0:21:20 – There are many things to worry about.
0:21:22 Before we say the bad things,
0:21:25 let me remind you enormous improvements
0:21:28 in drug capability for healthcare,
0:21:31 solutions to climate change, better vehicles,
0:21:33 huge discoveries in science,
0:21:36 greater productivity for kind of everyone,
0:21:38 a universal doctor, a universal educator,
0:21:40 all of these things are coming.
0:21:42 And those are fantastic.
0:21:47 A long way you come with, because these are very powerful,
0:21:49 especially in the hands of an evil person
0:21:51 and we know evil exists,
0:21:55 these systems can be used to harm large numbers of people.
0:21:58 The most obvious one is their use in biology.
0:22:00 Can these systems at some point in the future
0:22:02 generate biological pathogens
0:22:06 that could harm many, many, many, many humans?
0:22:08 Today, we’re quite sure they can’t,
0:22:09 but there’s a lot of people who think
0:22:12 that they will be able to unless we take some action.
0:22:15 Those actions are being worked on now.
0:22:16 What about cyber attacks?
0:22:18 You have a lone actor, a terrorist group,
0:22:22 North Korea, whomever, whatever your evil person or group is,
0:22:25 and they decide to take down the financial system
0:22:28 using a previously unknown attack vector,
0:22:30 so-called zero-day exploits.
0:22:33 So the systems are so powerful
0:22:36 that we are quite concerned
0:22:39 that in addition to democracies using them for gains,
0:22:42 dictators will use them to aggregate power
0:22:45 and they’ll be used in a harmful and military context.
0:22:49 So I’m freaked out about these AI girlfriends.
0:22:52 I feel as if the biggest threat in the U.S. right now
0:22:55 is loneliness that leads to extremism,
0:22:59 and I see these AI girlfriends and AI searches popping up,
0:23:02 and I see a lot of young men who have a lack of romantic
0:23:06 or economic opportunities turning to AI girlfriends
0:23:09 and begin to sequester from real relationships
0:23:11 and they become less likely to believe in climate change,
0:23:14 more likely to engage in misogynistic content,
0:23:17 sequester from school, their parents’ work,
0:23:20 and some they become really shitty citizens.
0:23:23 And I think men, young men are having so much trouble
0:23:28 that this low risk entry into these faux relationships
0:23:30 is just gonna speedball loneliness
0:23:32 and the externalities of loneliness.
0:23:33 Your thoughts?
0:23:35 – I completely agree.
0:23:38 There’s lots of evidence that there’s now a problem
0:23:39 with young men.
0:23:42 In many cases, the path to success for young men
0:23:46 has been, shall we say, been made more difficult
0:23:48 because they’re not as educated as the women are now.
0:23:50 Remember, there are more women in college than men,
0:23:55 and many of the traditional paths are no longer as available.
0:23:58 And so they turn to the online world
0:24:01 for enjoyment and sustenance,
0:24:03 but also because of the social media algorithms,
0:24:07 they find like-minded people who ultimately radicalize them
0:24:10 either in a horrific way like terrorism
0:24:12 or in the kind of way that you’re describing,
0:24:13 where they’re just maladjusted.
0:24:18 This is a good example of an unexpected problem
0:24:20 of existing technology.
0:24:24 So now imagine that the AI girlfriend or boyfriend,
0:24:26 although she was AI girlfriend as an example,
0:24:31 is perfect, perfect visually, perfect emotionally.
0:24:35 And the AI girlfriend in this case captures your mind
0:24:39 as a man to the point where she or whatever it is
0:24:41 takes over the way you thinking.
0:24:44 You’re obsessed with her.
0:24:46 That kind of obsession is possible,
0:24:49 especially for people who are not fully formed.
0:24:51 Parents are going to have to be more involved
0:24:52 for all the obvious reasons,
0:24:53 but at the end of the day,
0:24:56 parents can only control what their sons and daughters
0:24:58 are doing within reason.
0:25:01 We’ve ended up, again, using teenagers as an example.
0:25:05 We have all sorts of rules about age of maturity, 16, 18,
0:25:07 what have you, 21 in some cases,
0:25:10 and yet you put a 12 or 13 year old
0:25:11 in front of one of these things
0:25:13 and they have access to every evil
0:25:14 as well as every good in the world
0:25:16 and they’re not ready to take it.
0:25:17 So I think the general question of,
0:25:21 are you mature enough to handle it?
0:25:24 Sort of the general version of your AI girlfriend example
0:25:26 is unresolved.
0:25:28 – So I think people, most people would agree
0:25:30 that the pace of AI is scary
0:25:35 and that our institutions and our ability to regulate
0:25:37 are not keeping up with the pace of evolution here.
0:25:40 And we see what perfectly what happened
0:25:41 with social around this.
0:25:43 What can be done?
0:25:47 How, what’s an example or a construct or framework
0:25:50 that you can point to where we get the good stuff,
0:25:54 the drug discovery, the help with climate change,
0:25:57 but attempt to screen out or at least put in check
0:26:00 or put in some guardrails around the bad stuff.
0:26:03 What’s the, what are you advocating for?
0:26:06 – I think it starts with having an honest conversation
0:26:08 of where the problems come from.
0:26:11 So you have people who are absolutist on free speech,
0:26:14 which I happen to agree with,
0:26:17 but they confuse free speech of an individual
0:26:19 versus free speech for a computer.
0:26:23 I am strongly in favor of free speech for every human.
0:26:26 I am not in favor of free speech for computers.
0:26:30 And the algorithms are not necessarily optimizing
0:26:32 the best thing for humanity.
0:26:35 So as a general point, specifically,
0:26:37 we’re going to have to have some conversations
0:26:40 about what is, at what age are things appropriate?
0:26:42 And we’re also going to have to change some of the laws,
0:26:44 for example, section 230,
0:26:48 to allow for liability in the worst possible cases.
0:26:52 So when someone is harmed from this technology,
0:26:54 we need to have a solution to prevent further harm.
0:26:57 Every new invention has created harm.
0:26:58 Think about cars, right?
0:27:02 So cars used to hit everything and they were very unsafe.
0:27:04 Now cars are really quite safe.
0:27:08 Certainly by comparison to anything in history.
0:27:10 So the history of these inventions
0:27:13 is that you allow for the greatness
0:27:16 and you police the guard, technically the guardrails.
0:27:19 You put limits on what they can do.
0:27:21 And it’s an appropriate debate,
0:27:23 but it’s one that we have to have now for this technology.
0:27:26 I’m particularly concerned about the issue
0:27:28 that you mentioned earlier
0:27:31 about the effect of on human psyche.
0:27:34 Dr. Kissinger, who studied Kant,
0:27:37 was very concerned, and we write in the book at some length,
0:27:40 about what happens when your worldview
0:27:45 is taken over by a computer as opposed to your friends, right?
0:27:49 Isolated, the computer is feeding you stuff.
0:27:53 It’s not optimized around human values, good or bad.
0:27:55 God knows what it’s trying to do.
0:27:57 It’s trying to make money or something.
0:27:59 That’s not a good answer.
0:28:01 – So I think most reasonable people would say,
0:28:04 “Okay, some sort of fossil fuels are a net good.”
0:28:06 I would argue pesticides are a net good,
0:28:10 but we have emission standards and an FDA.
0:28:12 Most people would, I think, loosely agree
0:28:15 or mostly agree that some sort of regulation
0:28:18 that keeps these things in check makes sense.
0:28:20 Now, let’s talk about big tech,
0:28:22 which you were an instrumental player in.
0:28:24 You guys figured out a way, quite frankly,
0:28:27 to overrun Washington with lobbyists
0:28:30 and avoid all reasonable regulation.
0:28:31 Why are things gonna be different now
0:28:33 than what they were in your industry
0:28:35 when you were involved in it?
0:28:37 – Well, President Trump has indicated
0:28:41 that he is likely to repeal the executive order
0:28:43 that came out of President Biden,
0:28:45 which was an attempt at this.
0:28:49 So I think a fair prediction is that for the next four years,
0:28:51 there’ll be very little regulation in this area
0:28:54 as the president will be focused on the things.
0:28:57 So what will happen in those companies
0:29:00 is if there is real harm, there’s liability,
0:29:02 there’s lawsuits and things.
0:29:04 So the companies are not completely scot-free.
0:29:07 Our companies, remember, are economic agents
0:29:09 and they have lawyers whose jobs are to protect
0:29:12 their intellectual property and their goals.
0:29:14 So it’s gonna take, I’m sorry to say,
0:29:18 it’s likely to take some kind of a calamity
0:29:21 to cause a change in regulation.
0:29:23 And I remember when I was in California,
0:29:27 when I was younger, California driver’s licenses,
0:29:30 the address on your driver’s license was public
0:29:31 and there was a horrific crime
0:29:33 where a woman was followed to her home
0:29:36 and then she was murdered based on that information.
0:29:38 And then they changed the law.
0:29:42 And my reaction was, didn’t you foresee this, right?
0:29:46 You put millions and millions of license information
0:29:49 to the public and you don’t think that some idiot
0:29:51 who’s horrific is gonna harm somebody.
0:29:54 So my frustration is not that it will occur
0:29:55 because I’m sure it will,
0:29:58 but why did we not anticipate that as an example?
0:30:03 We should anticipate, make a list of the biggest harms.
0:30:05 I’ll give you another example.
0:30:08 These systems should not be allowed access to weapons.
0:30:10 Very simple.
0:30:14 You don’t want the AI deciding when to launch a missile.
0:30:17 You want the human to be responsible.
0:30:20 And these kinds of sensible regulations
0:30:22 are not complicated to state.
0:30:25 – Are you familiar with character AI?
0:30:26 – I am.
0:30:30 – Really, just a horrific incident
0:30:33 where a 14-year-old thinks he establishes a relationship
0:30:37 with an AI agent that he thinks is a character
0:30:38 from Game of Thrones.
0:30:40 He’s obviously unwell,
0:30:42 although he, my understanding is from his mother
0:30:45 who’s taken this on as an issue, understandably.
0:30:49 He did not qualify as someone who was mentally ill.
0:30:52 Establishes this very deep relationship
0:30:55 with obviously a very nuanced character.
0:30:59 And the net effect is he contemplates suicide
0:31:02 and she invites him to do that.
0:31:05 And the story does not end well.
0:31:07 And my view, Eric, is that if we’re waiting
0:31:09 for people’s critical thinking to show up
0:31:11 or for the better angels of CEOs of companies
0:31:13 that are there to make a profit,
0:31:14 that’s what they’re supposed to do.
0:31:15 They’re doing their job.
0:31:19 We’re just gonna have tragedy after tragedy after tragedy.
0:31:22 My sense is someone needs to go to jail.
0:31:23 And in order to do that,
0:31:26 we need to pass laws showing that if you’re reckless
0:31:29 with technology and we can reverse engineer it
0:31:31 to the death of a 14-year-old,
0:31:33 that you are criminally liable.
0:31:35 But I don’t see that happening.
0:31:37 So I would push back on the notion
0:31:39 that people need to think more critically.
0:31:40 That would be lovely.
0:31:42 I don’t see that happening.
0:31:45 I have no evidence that any CEO of a tech company
0:31:47 is gonna do anything but increase the value
0:31:49 of their shares, which I understand
0:31:52 and is a key component of capitalism.
0:31:54 It feels like we need laws
0:31:57 that either remove this liability shield.
0:31:58 I mean, does any of this change
0:32:01 until someone shows up in an orange jumpsuit?
0:32:04 – I can tell you how we dealt with this at Google.
0:32:07 We had a rule that in the morning we would look at things.
0:32:10 And if there was something that looked like real harm,
0:32:12 we would resolve it by noon.
0:32:15 And we would make the necessary adjustments.
0:32:19 The example that you gave is horrific,
0:32:21 but it’s all too common.
0:32:24 And it’s gonna get worse for the following reason.
0:32:26 So now imagine you have a two-year-old
0:32:28 and you have the equivalent of a bear
0:32:30 that is the two-year-old’s best friend.
0:32:32 And every year the bear gets smarter
0:32:34 and the two-year-old gets smarter too,
0:32:37 becomes three, four, five, and so forth.
0:32:40 That now 15-year-old’s best friend
0:32:43 will not be a boy or a girl of the same age.
0:32:45 It’ll be a digital device.
0:32:50 And such people highlighted in your terrible example
0:32:52 are highly suggestible.
0:32:55 So either the people who are building
0:32:58 the equivalent of that bear 10 years from now
0:33:01 are gonna be smart enough to never suggest harm,
0:33:05 or they’re gonna get regulated and criminalized.
0:33:06 Those are the choices.
0:33:09 The technology, I used to say that the internet
0:33:12 is really wonderful, but it’s full of misinformation
0:33:15 and there’s an off button for a reason, turn it off.
0:33:17 I can’t do that anymore.
0:33:20 The internet is so intertwined in our daily lives.
0:33:23 All of us, every one of us, for the good and bad,
0:33:25 that we can’t get out of the cesspool
0:33:27 if we think it’s a cesspool and we can’t make it better
0:33:29 ’cause it keeps coming at us.
0:33:32 The industry, to answer your question,
0:33:36 the industry is optimized to maximize your attention
0:33:37 and monetize it.
0:33:40 So that behavior is gonna continue.
0:33:43 The question is how do you manage the extreme cases?
0:33:46 Anything involving personal harm of the nature
0:33:49 that you’re describing will be regulated
0:33:50 one way or the other.
0:33:53 – Yeah, at some point, it’s just a damage
0:33:54 we incur until then, right?
0:33:58 We’ve had 40 congressional hearings on child safety
0:34:00 and social media and we’ve had zero laws.
0:34:05 – In fairness to that, there is a very, very extensive set
0:34:08 of laws around child sexual abuse,
0:34:10 which is obviously horrific as well.
0:34:14 And those laws are universally implemented
0:34:16 and well adhered to.
0:34:19 So we do have examples where everyone agrees
0:34:20 what the harm is.
0:34:22 I think all of us would agree that a suicide
0:34:25 of a teenager is not okay.
0:34:27 And so regulating the industry,
0:34:29 so it doesn’t generate that message,
0:34:31 strikes me as a brainer.
0:34:34 The ones which will be much harder are where
0:34:38 the system has essentially captured the emotions
0:34:41 of the person and is feeding them back to the person
0:34:43 as opposed to making suggestions.
0:34:46 And that’s, and we talk about this in the book,
0:34:48 when the system is shaping your thinking,
0:34:50 you are being shaped by a computer,
0:34:52 you’re not shaping it.
0:34:54 And because these systems are so powerful,
0:34:57 we worry and again, we talk about this in the book,
0:35:01 of the impact on the perception of truth and of society.
0:35:02 Who am I?
0:35:03 What do I do?
0:35:06 And ultimately, one of the risks here,
0:35:08 if we don’t get this under control,
0:35:11 is that we will be the dogs to the powerful AI
0:35:14 as opposed to us telling the AI what to do.
0:35:17 A simple answer to the question of when
0:35:20 is the industry believes that within five to 10 years,
0:35:22 these systems will be so powerful
0:35:25 that they might be able to do self-learning.
0:35:27 And this is a point where the system begins
0:35:29 to have its own actions, its own religion,
0:35:32 it’s called evolution, it’s called general intelligence,
0:35:34 AGI as it’s called.
0:35:37 And the arrival of AGI will need to be regulated.
0:35:39 We’ll be right back.
0:35:42 (upbeat music)
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0:38:29 – We know that social media
0:38:31 and a lot of these platforms and apps
0:38:34 and time on phone, is this not a good idea?
0:38:36 I’m curious what you think of my colleague’s work,
0:38:37 Jonathan Hyde, and that is,
0:38:40 is there any reason for anyone under the age of 14
0:38:41 to have a smartphone?
0:38:44 And is there any reason for anyone under the age of 16
0:38:45 to be on social media?
0:38:48 Shouldn’t we agegate pornography, alcohol, the military?
0:38:52 Shouldn’t we, specifically the device makers
0:38:55 and the operating systems, including your old firm,
0:38:58 shouldn’t they get in the business of agegating?
0:38:59 – They should.
0:39:02 Indeed, Jonathan’s work is incredible.
0:39:05 He and I wrote an article together two years ago,
0:39:07 which called for a number of things
0:39:09 in the area of regulating social media.
0:39:12 And we start with changing a law called COPPA
0:39:15 from 13 to 16.
0:39:17 And we are quite convinced
0:39:19 that using various techniques,
0:39:21 we can determine the age of the person
0:39:23 with a little bit of work.
0:39:25 And so people say, well, you can’t implement it.
0:39:27 Well, that doesn’t mean you shouldn’t try.
0:39:30 And so we believe that at least the pernicious effects
0:39:34 of this technology on below 16 can be addressed.
0:39:36 When I think about all of this,
0:39:39 to me, we want children to be able to grow up
0:39:42 and grow up with humans as friends.
0:39:46 And I’m sure with the power of AI arrival,
0:39:48 that you’re gonna see a lot of regulation
0:39:51 about child content.
0:39:54 What can a child below 16 see?
0:39:56 This does not answer the question of what do you do
0:39:58 with the 20 year old, right?
0:40:00 Who is also still being shaped.
0:40:03 And as we know, men develop a little bit later than women.
0:40:05 And so let’s focus on the underdeveloped man
0:40:08 who’s having trouble in college or what have you.
0:40:09 What do we do with them?
0:40:11 And that question remains open.
0:40:16 – In terms of the idea that the genie is out of the bottle
0:40:19 here and we face a very real issue or fulcrum retention.
0:40:22 And that is we wanna regulate it.
0:40:23 We wanna put in guardrails.
0:40:28 At the same time, we wanna let our sprinters and our IP
0:40:29 and our minds and our universities
0:40:31 and our incredible for profit machine,
0:40:34 we wanna let it run, right?
0:40:37 And the fear is that if you regulate it too much,
0:40:41 the Chinese or the Islamic Republic
0:40:43 isn’t quite as concerned
0:40:46 and gets ahead of us on this technology.
0:40:48 How do you balance that tension?
0:40:51 – So there are quite a few people in the industry,
0:40:53 along with myself who are working on this.
0:40:58 And the general idea is relatively light regulation
0:41:01 looking for the extreme cases.
0:41:03 So the worst of the extreme events
0:41:06 would be a biological attack, a cyber attack,
0:41:08 something that harmed a lot of people
0:41:10 as opposed to a single individual,
0:41:11 which is always a tragedy.
0:41:14 Any misuse of these in war,
0:41:17 any of those kinds of things we worry a lot about.
0:41:19 And there’s a lot of questions here.
0:41:24 One of them is, do you think that if we had a GI system
0:41:30 that developed a way to kill all of the soldiers
0:41:33 from the opposition in one day that it would be used?
0:41:36 And I think the answer from a military general perspective
0:41:37 would be yes.
0:41:40 The next question is, do you think that the North Koreans,
0:41:44 for example, or the Chinese would obey the same rules
0:41:45 about when to apply that?
0:41:47 And the answer is no one believes
0:41:50 that they would do it safely and carefully
0:41:52 under the way the US law would require.
0:41:56 US law has a law called person in the loop
0:41:58 or meaningful human control
0:42:01 that tries to keep these things from going out of hand.
0:42:06 So what I actually think is that we don’t have a theory
0:42:09 of deterrence with these new tools.
0:42:13 We don’t know how to deal with the spread of them.
0:42:16 And the simple example,
0:42:17 and sorry for the diversion for a sec,
0:42:19 but there’s closed source and open source.
0:42:22 Closed is like you can use it,
0:42:25 but the software and the numbers are not available.
0:42:27 There are other systems called open source
0:42:29 where everything is published.
0:42:32 China now has two of what appear to be
0:42:35 the most powerful models ever made
0:42:37 and they’re completely open.
0:42:39 And we’re obviously, you and I are not in China
0:42:42 and I don’t know why China made a decision to release them,
0:42:45 but surely evil groups and so forth
0:42:46 will start to use those.
0:42:49 Now maybe they don’t speak Chinese or what have you,
0:42:52 or maybe the Chinese just discount the risk,
0:42:55 but there’s a real risk of proliferation of systems
0:42:57 in the hands of terrorism.
0:43:00 And proliferation is not gonna occur
0:43:03 by misusing Microsoft or Google or what have you.
0:43:05 It’s going to be by making their own servers
0:43:06 in the dark web.
0:43:08 And an example, a worry that we all have
0:43:10 is exfiltration of the models.
0:43:14 I’ll give an example, Google or Microsoft or OpenAI
0:43:16 spends $200 million or something
0:43:18 to build one of these models, they’re very powerful.
0:43:22 And then some evil actor manages to exfiltrate it
0:43:25 out of those companies and put it on the dark web.
0:43:29 We have no theory of what to do when that occurs.
0:43:31 Because we don’t control the dark web,
0:43:34 we don’t know how to detect it and so forth.
0:43:38 In the book we talk about this and say that eventually
0:43:40 the network systems globally will have
0:43:43 fairly sophisticated supervision systems
0:43:45 that will watch for this.
0:43:47 Because it’s another example of proliferation.
0:43:51 It’s analogous to the spread of enriched uranium.
0:43:53 If anyone tried to do that, there’s an awful lot
0:43:55 of monitoring systems that would say
0:43:58 you have to stop right now or we’re gonna shoot you.
0:43:59 – So you make a really cogent argument
0:44:02 for the kind of existential threat here,
0:44:05 the weaponization of AI by bad actors.
0:44:07 And we have faced similar issues before.
0:44:09 My understanding is there are multilateral treaties
0:44:13 around bioweapons or we have nuclear arms treaties.
0:44:16 So is this the point in time where people such as yourself
0:44:21 and our defense infrastructure should be thinking about
0:44:25 or trying to figure out multilateral agreements?
0:44:27 And again, the hard part there is my understanding
0:44:30 is it’s very hard to monitor things like this.
0:44:33 And should we have something along the lines of Interpol
0:44:36 that’s basically policing this and then fighting fire
0:44:41 with AI to go out and find scenarios
0:44:43 where things look very ugly and move in
0:44:44 with some sort of international force.
0:44:46 It feels like a time for some sort
0:44:51 of multinational cooperation is upon us, your thoughts.
0:44:51 – We agree with you.
0:44:54 And in the book, we specifically talk about this
0:44:58 in a historical context of the nuclear weapons regime,
0:45:01 which Dr. Kissinger, as you know, invented largely.
0:45:04 What’s interesting is working with him,
0:45:08 you realize how long it took for the full solution to occur.
0:45:11 America used the bomb in 1945.
0:45:15 Russia or Soviet Union demonstrated in 1949.
0:45:17 So that’s roughly, that was a four year gap.
0:45:20 And then there was sort of a real arms race.
0:45:23 And once that it took roughly 15 years
0:45:27 for an agreement to come for limitations on these things,
0:45:30 during which time we were busy making an enormous number
0:45:33 of weapons, which ultimately were a mistake,
0:45:35 including, you know, these enormous bombs
0:45:37 that were unnecessary.
0:45:40 And so things got out of hand.
0:45:44 In our case, I think what you’re saying is very important
0:45:47 that we start now, and here’s where I would start.
0:45:50 I would start with a treaty that says,
0:45:53 we’re not going to allow anyone who’s the signature
0:45:56 of the treaty to have automatic weapon systems.
0:46:00 And by automatic weapons, I don’t mean automated.
0:46:03 I mean, ones that make the decision on their own.
0:46:07 So an agreement that any use of AI, of any kind
0:46:11 in a conflict sense, has to be owned and authorized
0:46:15 by a human being who is authorized to make that decision.
0:46:17 That would be a simple example.
0:46:20 Another thing that you could do as part of that
0:46:23 is say that you have a duty to inform
0:46:26 when you’re testing one of these systems
0:46:28 in case it gets out of hand.
0:46:31 Now, whether these treaties can be agreed to,
0:46:34 I don’t know, remember that it was the horror
0:46:37 of nuclear war that got people to the table
0:46:39 and it still took 15 years.
0:46:43 I don’t want us to go through an analogous bad incident
0:46:45 involving an evil actor in North Korea.
0:46:48 Again, I’m just using them as bad examples
0:46:50 or even Russia today.
0:46:52 We obviously don’t trust.
0:46:54 I don’t want to run that experiment and have all that harm
0:46:58 and then say, hey, we should have foreseen this.
0:47:01 – Well, my sense is when we are better to technology,
0:47:03 we’re not in a hurry for a multilateral treaty, right?
0:47:06 When we’re under the impression that our nuclear scientists
0:47:07 are better than your, remember,
0:47:09 our Nazis are smarter than your Nazis kind of thing,
0:47:11 that we like, we don’t want a multilateral treaty
0:47:13 ’cause we see advantage.
0:47:15 And curious if you agree with this,
0:47:20 we have better AIs than anyone else.
0:47:21 Does that get in the way of a treaty
0:47:23 or should we be doing this from a position of strength?
0:47:25 And also, if there’s a number two,
0:47:27 and maybe you think we’re not the number one,
0:47:30 but assuming you think that the US is number one in this,
0:47:31 who is the number two?
0:47:33 Who do you think poses the biggest threat?
0:47:36 Is it their technology or their intentions or both?
0:47:39 If you were to hear that one of these
0:47:41 really awful things took place,
0:47:43 who would you think most likely
0:47:45 are the most likely actors behind it?
0:47:46 Is it a rogue state?
0:47:47 Is it a terrorist group?
0:47:49 Is it a nation state?
0:47:51 – First place, I think that the short-term threats
0:47:54 are from rogue states and from terrorism.
0:47:56 And because as we know, there’s plenty of groups
0:48:01 that seek harm against the elites in any country.
0:48:04 Today, the competitive environment is very clear
0:48:08 that the US with a partner UK, I’ll give you an example.
0:48:12 This week, there were two libraries from China
0:48:14 that were released, open source.
0:48:17 One is a problem solver that’s very powerful
0:48:21 and another one is a large language model that’s equal.
0:48:24 And in some cases, it exceeds the one from META
0:48:28 which they use every day, it’s called Lama III, 400 billion.
0:48:32 I was shocked when I read this ’cause I had assumed
0:48:35 that are in my conversation with the Chinese
0:48:39 that they were two to three years late.
0:48:41 It looks to me like it’s within a year now.
0:48:43 So it’d be fair to say it’s the US
0:48:46 and then China within a year’s time.
0:48:49 Everyone else is well behind.
0:48:51 Now, I’m not suggesting that China
0:48:54 will launch a rogue attack against us in American city.
0:48:57 I am alleging that it’s possible
0:49:01 that a third party could steal from China
0:49:03 ’cause it’s open source or from the US
0:49:05 if they’re malevolent and do that.
0:49:09 So the threat escalation matrix goes up
0:49:11 with every improvement.
0:49:14 At today, the primary use of these tools
0:49:18 is to sow misinformation, which is what you talked about.
0:49:21 But remember that there’s a transition to agents
0:49:23 and the agents do things.
0:49:26 So it’s a travel agent or it’s whatever.
0:49:29 And the agents speak English, you give them English
0:49:33 and they respond in English so you can concatenate them.
0:49:36 You can literally put agent one talks to agent two,
0:49:39 talks to agent three, talks to agent four.
0:49:43 And there’s a scheduler that makes them all work together.
0:49:46 And so for example, you could say to these agents,
0:49:49 design me the most beautiful building in the world,
0:49:53 go ahead and file all the permits,
0:49:55 negotiate the fees of the builders
0:49:57 and tell me how much it’s gonna cost
0:50:00 and tell my accountant that I need that amount of money.
0:50:01 That’s the command.
0:50:03 So think about that.
0:50:06 Think about the agency, the ability to put
0:50:09 an integrated solution that today takes 100 people
0:50:13 who are very talented and you can do it by one command.
0:50:17 So that acceleration of power could also be misused.
0:50:19 I’ll give you another example.
0:50:21 You were talking earlier about the impact on social media.
0:50:26 I saw a demonstration in England, in fact.
0:50:31 The first command was build a profile of a woman who’s 25,
0:50:36 she has two kids and she has the following strange beliefs.
0:50:40 And the system wrote the code and created a fake persona
0:50:44 that existed on that particular social media case.
0:50:47 Then the next command was take that person
0:50:51 and modify that person to every possible stereotype,
0:50:55 every race, sex, so forth and so on, age, demographic thing
0:50:58 with similar views and populate that
0:51:02 and 10,000 people popped up just like that.
0:51:06 So if you wanted, for example, today, this is true today,
0:51:07 if you wanted to create a community
0:51:10 of 10,000 fake influencers to say, for example,
0:51:12 that smoking doesn’t cause cancer,
0:51:15 which as we know is not true, you could do it.
0:51:17 And one person with a PC can do this.
0:51:21 Imagine when the AI’s are far more powerful
0:51:22 than they are today.
0:51:26 – So one of the things that Dr. Kissinger was known for
0:51:27 and quite frankly I appreciate
0:51:29 was this notion of real politic.
0:51:31 Obviously we have aspirations around
0:51:33 the way the world should be,
0:51:34 but as it relates to decision-making,
0:51:37 we’re also gonna be very cognizant of the way the world is
0:51:41 and make some, I mean, he’s credited with a lot of very
0:51:43 controversial/difficult decisions
0:51:46 depending on how you look at it.
0:51:49 What I’m hearing you say leads,
0:51:51 all these roads lead to one place
0:51:54 in my kind of quote unquote critical thinking
0:51:56 or lack there of a brain and that is,
0:52:00 there’s a lot of incentive to kiss and make up with China
0:52:02 and partner around this stuff.
0:52:06 That if China and the US came to an agreement
0:52:08 around what they were gonna do or not do
0:52:11 and bilaterally created a security force
0:52:15 and agreed not to sponsor proxy agents against the West
0:52:18 or each other that we’d have a lot,
0:52:20 that would be a lot of progress.
0:52:22 That might be 50, 60, 80% of the whole shooting match
0:52:24 as if the two of us could say,
0:52:27 we’re gonna figure out a way to trust each other
0:52:29 on this issue and we’re gonna fight the bad guys
0:52:31 together on this stuff.
0:52:32 Your thoughts?
0:52:34 – So Dr. Kissinger of course was the world’s expert
0:52:36 in China, he opened up China,
0:52:38 which is one of his greatest achievements.
0:52:42 And but he was also a proud American
0:52:46 and he understood that China could go one way or the other.
0:52:49 His view on China was that China,
0:52:50 and he wrote a whole book on this,
0:52:52 was that China wanted to be the middle kingdom
0:52:54 as part of their history,
0:52:57 where they’d sort of dominated all the other countries,
0:52:58 but it’s not like America.
0:53:02 His view was they wanted to make sure the other countries
0:53:04 would show fealty to China,
0:53:07 in other words, do what they wanted.
0:53:10 And occasionally, if they didn’t do something,
0:53:12 China would then extract some payment,
0:53:14 such as invading the country.
0:53:16 That’s roughly what Henry would say.
0:53:20 So he was very much a realist about China as well.
0:53:24 His view would be at odds today
0:53:27 with Trump’s view and the US governments.
0:53:30 The US government is completely organized today
0:53:35 around decoupling, that is literally separating.
0:53:38 And his view, which I can report accurately
0:53:39 ’cause I went to China with him,
0:53:43 was that we’re never going to be great friends,
0:53:46 but we have to learn how to coexist.
0:53:51 And that means detailed discussions on every issue
0:53:54 at great length to make sure
0:53:57 that we don’t alarm each other or frighten each other.
0:54:01 His further concern was not that President Xi
0:54:04 would wake up tomorrow and invade Taiwan,
0:54:06 but that you would start with an accident
0:54:08 and then there would be an escalatory ladder.
0:54:11 And that because the emotions on both sides,
0:54:14 you would end up just like in World War I,
0:54:17 which started with a shooting in Sarajevo,
0:54:20 that ultimately people found in a few months
0:54:21 that they were in a world war
0:54:23 that they did not want and did not expect.
0:54:26 And once you’re in the war, you have to fight.
0:54:30 So the concern with China would be roughly that
0:54:35 we are codependent and we’re not best friends.
0:54:40 Being dependent is probably better
0:54:44 than being completely independent, that is non-dependent
0:54:46 because it forces some level of understanding
0:54:47 and communication.
0:54:50 – Eric Schmidt is a technologist,
0:54:51 entrepreneur and philanthropist.
0:54:55 In 2021, he founded the Special Competitive Studies Project,
0:54:57 a non-profit initiative to strengthen America’s
0:55:00 long-term competitiveness in AI
0:55:01 and technology more broadly.
0:55:03 Before that, Eric served as Google’s
0:55:05 chief executive officer and chairman,
0:55:08 and later as executive chairman and technical advisor.
0:55:10 He joins us from Boston, Eric.
0:55:12 In addition to your intelligence,
0:55:14 I get to sense your heart’s in the right place
0:55:17 and you’re using your human and financial capital
0:55:18 to try and make the world a better place.
0:55:20 Really appreciate you and your work.
0:55:26 (upbeat music)
0:55:29 (upbeat music)
0:55:32 – I was a bit of a happiness.
0:55:36 I’m at this gathering called Summit
0:55:39 and I’ve been struck by how many people are successful
0:55:41 or at least the appearance of being successful.
0:55:44 So as I know the rich kids, but they do seem to be,
0:55:48 I don’t know, economically secure or overeducated.
0:55:50 Interesting, some of them started sold businesses,
0:55:53 but what I see is a lot of people searching
0:55:54 and they’ll say shit like,
0:55:56 well, I’m just taking a year to really focus
0:55:57 on improving my sleep.
0:56:02 Okay, no, sleep is supposed to be part of your arsenal.
0:56:03 It’s not why you’re fighting this war.
0:56:05 You need good sleep, but I don’t think
0:56:07 you should take a year to focus on it.
0:56:09 Anyways, does that sound boomer of me?
0:56:11 But this notion of finding a purpose
0:56:12 and what I have found is,
0:56:14 and this is probably one of the accoutrements
0:56:18 of a prosperous society, is ask yourself,
0:56:20 do you have the wrong amount of money?
0:56:21 Do you have just the wrong amount of money?
0:56:22 What do I mean by that?
0:56:24 Obviously, the worst amount of money is not enough,
0:56:26 but a lot of my friends and a lot of people,
0:56:28 I think at this summit,
0:56:30 suffer from just having the wrong amount of money.
0:56:31 What do I mean by that?
0:56:32 They have enough money
0:56:34 so they don’t have to do something right away,
0:56:36 but they don’t have enough money to retire
0:56:39 or go into philanthropy or really pursue something creative
0:56:41 and not make money.
0:56:42 That’s exactly the wrong amount of money.
0:56:45 And I would say a good 50% of my friends
0:56:47 who kind of hit a wall, got stuck,
0:56:49 experienced their first failure,
0:56:53 sit around and wait for the perfect thing
0:56:55 and wake up one, two, three years later
0:56:57 and really don’t have a professional purpose
0:56:59 or a professional source of gravity.
0:57:03 And you know, the kind of basic stuff, right?
0:57:05 Do something in the agency of others,
0:57:08 be in service to others, but more than anything,
0:57:11 I think the call sign is just now.
0:57:15 And that is, don’t let perfect be the enemy of good
0:57:18 and give yourself a certain amount of time to find something.
0:57:22 And within that amount of time, when it elapses,
0:57:24 take the best thing that you have.
0:57:26 And it might not be the,
0:57:28 it might not foot to the expectations
0:57:29 that you have for yourself
0:57:32 or be really exciting or dramatic or really lucrative.
0:57:33 But the thing about working
0:57:35 is it leads to other opportunities.
0:57:37 And what I see is a lot of people
0:57:39 who kind of are cast into the wilderness
0:57:41 and then come out of the wilderness with no fucking skills.
0:57:43 And that is, you’ll be surprised
0:57:47 how much your Rolodex and your skills atrophy.
0:57:47 And so what is the key?
0:57:49 Do you want to write a book?
0:57:50 Do you want to start a podcast?
0:57:52 Do you want to try and raise a fund?
0:57:53 Do you want to start a company?
0:57:54 What is the key?
0:57:56 What is the critical success factor?
0:57:57 Is it finding the right people?
0:57:58 Is it finding capital?
0:57:59 Is it thinking through?
0:58:01 Is it positioning the concept?
0:58:02 Is it doing more research?
0:58:05 No, the key is now.
0:58:06 You want to write a book,
0:58:09 open your fucking laptop and start writing.
0:58:10 And it’s going to be shit.
0:58:11 But then when you go back and edit it,
0:58:12 it’ll be less shitty.
0:58:14 And then if you find someone to help you review it
0:58:15 and you find some people,
0:58:18 it’ll get dramatically even less shittier.
0:58:20 All right, you want to start a business?
0:58:20 Nobody knows.
0:58:22 The only way you have a successful business
0:58:24 is you start a bad one and you start iterating.
0:58:26 But here’s the key, starting.
0:58:27 You want to be in a nonprofit.
0:58:29 You want to start helping other people.
0:58:32 We’ll start with one person and see if in fact,
0:58:34 your infrastructure, your skills, your expertise,
0:58:37 tangibly change the community, the environment,
0:58:38 or their life.
0:58:39 What is key to all of this?
0:58:42 Three words, first N, second O, third W.
0:58:44 I have so many people I run across
0:58:47 who are searching, not because they’re not talented,
0:58:49 not because there’s not opportunity,
0:58:51 but they’re thinking they’re going to find the perfect thing.
0:58:56 No, find the best thing that is now and get started.
0:58:59 (upbeat music)
0:59:01 This episode was produced by Jennifer Sanchez
0:59:02 and Caroline Shagren.
0:59:04 Drew Burroughs is our technical director.
0:59:05 Thank you for listening to the Property Pod
0:59:07 from the Vox Media Podcast Network.
0:59:08 We will catch you on Saturday
0:59:11 for No Mercy, No Malice as read by George Hahn.
0:59:13 And please follow our Property Markets Pod
0:59:15 wherever you get your pods for new episodes
0:59:16 every Monday and Thursday.
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