0:00:05 Support for this episode comes from The Current. The Current podcast is back with an exciting
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0:00:13 Tune in to hear what’s driving conversation in the fast-moving world of digital advertising.
0:00:17 The unique insights from brands is diverse as Hilton, Instacart, Moderna, Major League
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0:00:33 a major CPG brand like Hershey can learn from each other. Listen in and subscribe to The
0:00:39 Current at TheCurrent.com or wherever you get your podcasts.
0:00:43 Support for property comes from better help. It’s really empowering to face your fears.
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0:01:51 Episode 321. 321 is the year it goes serving Orlando, Florida. In 1921, the first Miss America
0:01:56 pageant was held in Atlantic City, New Jersey. True story, a woman who injected her eight-year-old
0:02:02 daughter with Botox for beauty pageants has lost custody of the child. Her daughter didn’t
0:02:16 look surprised. Go, go, go!
0:02:22 Welcome to the 321st episode of the Prop G-Pod. In today’s episode, we speak with Brian Chesky,
0:02:27 the co-founder and CEO of Airbnb. We discussed with Brian founder mode and how Airbnb is becoming
0:02:31 a leading indicator for the broader economy. We also dive into how Airbnb is leveraging
0:02:37 AI and what’s next for the platform. Okay, I’m back in New York. What does that mean?
0:02:43 I have self-care in New York. First off, my place here is very zen. No kids, no shit everywhere,
0:02:46 like climbing walls. That’s not true. I have a climbing wall in the kids room, but it’s
0:02:52 more for show. It’s more meant to signal what a nice dad I am with a kids room, and I got
0:02:58 the skateboards and everything that they don’t use. I’m mostly here for self-care, acupuncture.
0:03:05 I do my Botox. If you can’t tell, I’m actually crying right now. Anyways, I’m also starting
0:03:09 this thing called NAD. As far as I can tell, that is something that rich people do to try
0:03:14 and pretend we can live forever. I’m spending so much time and money on self-care. I think
0:03:17 it’s a little bit like the alternative investments universe where wealthy people like to think
0:03:22 that they can beat the market so they pay some very credentialed person to underperform
0:03:26 the market by the amount of their fees. I’m not sure a lot of this is worth it. I’m actually
0:03:31 a little fed up. Also, when you get this NAD treatment, it takes two to three hours.
0:03:38 Some lovely young woman comes over and sets up an IV and then puts basically liquid nausea
0:03:41 into you. I keep telling her to slow it down because I don’t want to throw up in front
0:03:50 of her. For that nausea, I better look like Macaulay Culkin in the first home alone. I
0:03:54 want to look like … You know who I want to look like? I want to look like Barbara Streisand
0:03:59 in the first yental or the yental. Papa, can you hear me? I want to look like a young
0:04:06 Barbara Streisand. It could happen. It could happen. Okay, what’s happening? What’s happening
0:04:10 other than Babs comes to New York. A big story from the Wall Street Journal. Private equity
0:04:15 firms are spending millions of dollars to purchase HVAC plumbing and electrical companies.
0:04:20 That’s why private equity is coming to a van parked outside and a guy looking to fix your
0:04:25 heater. According to Pitchbook, private equity investors have purchased nearly 800 HVAC
0:04:31 plumbing and electric companies since 2022. Why are they doing this? The Wall Street Journal
0:04:35 reports that investors see the skilled trades as ripe for opportunity. Also, it’s an industry
0:04:40 with recurring predictable revenue. Air conditioners break, boilers need upgrades, etc. I also
0:04:46 think probably the biggest thing here is that there are supposedly tens of not hundreds
0:04:50 of thousands of small businesses owned by boomers that have no succession plan. Their
0:04:54 kids want to be baristas or go back and get their masters in philosophy or go touch Indians
0:04:59 or whatever it is they’re going to do. They have no interest in taking over dads. Air conditioning
0:05:05 repair company, despite the fact these are really good businesses. There’s no succession
0:05:10 plan, which means, and they’re good businesses, maybe doing one, three, $5 million, $10 million,
0:05:14 which means they’re ripe for acquisition because someone just wants liquidity in an exit and
0:05:17 probably says, okay, they’ve been doing this with dental clinics. They’ve been rolling
0:05:20 them up and saying, all right, you stick around for four years, we’ll bring in another dentist,
0:05:25 who we pay less, you’ll get an exit, you’ll get some liquidity, and we get to buy a business,
0:05:30 a solid business with a built-in customer base, pretty low, multiple of EBITDA, and
0:05:35 then we can roll them up and kind of consolidate the back end, bring some efficiencies around
0:05:38 marketing, around technology. I think this makes a lot of sense. Now, people will say,
0:05:42 oh no, it’s private equity showing up to bad guys. I don’t think that’s true at all here.
0:05:47 I think it’s giving a bunch of dentists and people who own small businesses in the trades
0:05:52 and exits, so I think it’s a good thing. We’ve previously spoken about the shortage of skilled
0:05:57 tradespeople, labor shortages worsened by the impact of COVID-19, have increased competition
0:06:02 for workers driving up wages in these sectors by over 20% since Q1 of 2020. There are a lot
0:06:06 of jobs in the main street economy, and there’s a critical need for these trade skills in
0:06:10 the U.S. According to McKinsey and Company, the annual demand for critical skilled roles
0:06:15 in the U.S. could exceed the projected annual growth or new jobs by more than 20 times between
0:06:21 2022 and 2032. Jesus, think about that. The U.S. could exceed the projected annual growth
0:06:26 and new jobs by more than 20 times for critical skilled roles. Where is this demand coming
0:06:31 from? Infrastructure needs, a surge in real estate to redevelopment, and a shift from
0:06:37 fossil fuels to renewable energy sources. This is such an exciting opportunity. I really
0:06:45 do like to never miss an opportunity to virtue signal. I’m involved in a program that increases
0:06:50 funding for continuing education at UCLA and Berkeley because they wouldn’t let me call
0:06:54 it vocational training, but I think there’s an enormous opportunity for the two-thirds
0:06:59 of kids that don’t end up with a traditional liberal arts degree. The majority of our kids,
0:07:02 hello, parents, aren’t going to end up with a traditional college degree. And guess what?
0:07:05 It doesn’t mean you failed. It doesn’t mean they failed. And there are a lot of wonderful
0:07:10 jobs in the mainstream economy. The problem, the problem is that we shame kids and family.
0:07:14 If you’ve ever been to a cocktail party or a party where all of a sudden under hush breath,
0:07:17 they go, “Well, little Johnny dropped out of Rutgers and his home.” It’s like, “Oh no,
0:07:22 Johnny’s a failure and the parents have failed.” No, most kids aren’t cut out for the traditional
0:07:28 liberal arts college degree. There is an enormous opportunity. Gen Z, more young people are
0:07:32 turning to trades as they grow dissolution with the traditional college path, which is,
0:07:36 I don’t know, inspiring or encouraging. Enrollment of vocational training programs is on the
0:07:40 rise, as it should be, while numbers at community colleges and four-year schools have dropped.
0:07:44 According to data from the National Student Clearinghouse, vocational-focused community
0:07:49 colleges have seen a 16% jump in enrollment since 2018. Students pursuing construction
0:07:53 trades increased by 23% and enrollment in HVAC and vehicle maintenance programs grew
0:08:00 by 7%. A Harris Bull done for Intua Credit Karma found that half of Gen Z and 42% of millennials
0:08:04 are considering switching to blue collar jobs, jobs including welding, plumbing, or electrical
0:08:10 work. By the way, just free gift for purchase here, people enjoy these jobs. They like working
0:08:16 outside. They’re working with people. The day goes fast. They own their own business.
0:08:22 This is just a fantastic opportunity for young people. There’s an enormous, if you will,
0:08:28 succession problem around these businesses. These are great jobs. They pay well. This
0:08:32 is, to a certain extent, taking advantage of a little bit of income inequality in that
0:08:37 there are so many amazing mega-mansions going up. Every home needs a new roof. Every home
0:08:42 is thinking about solar panels or energy-efficient HVAC. We’re going to need tens if not hundreds
0:08:45 of thousands of skilled tradespeople to build all these nuclear power plants, which are
0:08:52 going to come back online. What do we need to do as parents and as people going to college?
0:08:57 You haven’t failed. No have your parents failed. No have you failed. If you decide to pursue
0:09:01 a career in the trades, yeah, you want to get a philosophy degree and be a barista, fine,
0:09:04 and maybe it works out, maybe you teach, maybe you write scripts, whatever it is you want
0:09:09 to do, fine. But if, in fact, you decide to work with your hands and make good money, maybe
0:09:14 even great money, that’s absolutely a fantastic career path. We need more on-ramps. We need
0:09:17 to be more thoughtful about the fact that two-thirds of our kids aren’t going to end
0:09:23 up with a traditional college degree, work with your hands, vocational jobs are an outstanding
0:09:32 opportunity for America. We’ll be right back for our conversation with Brian Chesky.
0:09:36 Support for property comes from Mint Mobile. There are times when you discover something
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0:13:03 Welcome back. Here’s our conversation with Brian Chesky, the co-founder and CEO of Airbnb.
0:13:13 Okay. Here with Brian Chesky, just up front disclosure, Airbnb, I am a shareholder. It’s
0:13:17 one of my biggest holdings. I’m a big fan of the company. Anyways, enough of that shit.
0:13:20 Brian, where does this podcast find you? I’m actually in New York, though. I usually live
0:13:25 in San Francisco. I’m in Airbnb’s office here in New York. Got it. I’ve always thought. I mean,
0:13:29 we’ll come back. We’ll talk specifically about Airbnb. But if I would say you guys are a great
0:13:34 forward-looking indicator of where the economy is headed in travel trends and consumer spending
0:13:40 and what people are spending money on, what can you provide insight into in terms of the
0:13:44 economy and travel trends as evidenced by what’s happening on your platform?
0:13:49 One of the things that I think is so notable in the last year was this the year of events on
0:13:56 Airbnb. You saw the Paris Olympics. We had 500,000 people staying at Airbnb for the Paris
0:14:01 Olympics. That’s equivalent of eight Olympic stadiums where the people and 50,000 new homes
0:14:07 were listed on Airbnb just for that reason. When Taylor Swift came and she did her international
0:14:13 tour, you can literally predict her tour by looking at the rising occupancy of Airbnb’s.
0:14:19 It was a massive phenomenon and sure tour generated a bigger business lift than some
0:14:24 giant international events that would be in these cities. We’re starting to see a lot
0:14:29 of more people want to gather for events. And why are they doing that? I think people
0:14:32 are desiring connection. They want to get out of the house. They want to have a shared
0:14:36 experience. They want to have the experience of other people. This often involves traveling.
0:14:41 More and more people are not living in the same city as people they grow up with. And
0:14:45 so they have to travel to see them. They do more of these annual trips together. We’re
0:14:51 seeing a huge boom in ski destinations. That’s like really popular. It’s like the Austrian
0:14:55 Alps, Italian Alps, the French Alps this winter. We’re seeing a lot more people go to Southeast
0:15:02 Asia. So basically the summary is that travel is going strong. I think that it’s just the
0:15:07 very beginning. I think as emerging middle classes form, the first thing people want
0:15:11 to do is travel. And as the economy is strong, more people will travel. That’s what we’re
0:15:19 seeing. I’ve heard there was sort of this revenge travel trend after COVID. And I’ve
0:15:23 actually talked to some hotel operators saying that actually travel has started to wane a
0:15:29 little bit because people kind of got there at it scratched. And now it’s starting to
0:15:32 come back a little bit. Are you seeing the same trends?
0:15:36 We’re seeing is like what I would describe as like probably the post pandemic kind of
0:15:41 equilibrium. So during the pandemic, there was like basically three things didn’t happen.
0:15:44 People didn’t go to cities, they didn’t cross borders and they didn’t travel for business.
0:15:48 And so you had this different type of travel that we benefited from that hotels didn’t,
0:15:53 which is people getting in cars and staying in big homes and more rural or like less urban
0:15:58 destinations. Then you had this huge boom, which I think was a little bit of a natural
0:16:02 amount of pent-up demand. I think the pent-up demand is now subsided and now we’re in the
0:16:06 new world. The new world though is quite a lot of travel and I think it’s going to continue
0:16:11 to grow, but it’s definitely not like the pent-up demand era of like 2021, 2022. Now
0:16:15 we still grow because we grow through all that.
0:16:19 And any trends in terms of demographics around who’s traveling more, who’s traveling less
0:16:22 than what it says about the health of our economy?
0:16:25 There’s a lot more people are traveling in groups. You know, before the pandemic, it
0:16:32 was a lot of like solo travelers and couples. Now it’s families. And I think there’s a
0:16:36 couple explanations for why. I mean, one obvious demographic shift is like, Scott, I mean,
0:16:42 I started coming out as 26. I’m like a millennial and most 26 year olds don’t have families,
0:16:46 but like essentially there was a big question when people are under 30s and 40s, do they
0:16:51 age at Airbnb or do they keep using Airbnb? Well, luckily for us, the answer is they kept
0:16:54 using Airbnb and a lot of those people now have families. So there’s a whole generation
0:16:59 of people that started as single people, then they used Airbnb for like couples travels
0:17:03 and now they’re using a family travel. Additionally, I just think a lot of families are now realizing
0:17:08 Airbnb is a better solution for a lot of travel than hotels. We have this big advertising
0:17:13 campaign. It’s kind of a, almost like a references the Mac versus PC campaign. It’s kind of like
0:17:18 Airbnb versus hotels. We kind of show that for family travel, for group travel, like
0:17:21 people being able to stay in a house, be able to cook together, not be separate in different
0:17:25 rooms is really compelling. So that’s probably the big one. The other one we’re seeing, we’re
0:17:31 seeing a couple others. People are staying longer. The length of stay is going up. And
0:17:35 I think maybe the answer to that explanation is people more flexibility, right? The fact
0:17:39 is like 10 years ago, it would be unthinkable for you and I do an interview unless we were
0:17:43 in the same city together. And now with Zoom and this technology, we can be able to do
0:17:46 that. So I think there’s a lot more flexibility. And then I think people are just traveling
0:17:51 to more locations, right? I think, you know, before everyone went to Rome, everyone to
0:17:54 Paris, everyone to Vegas, everyone to Miami, they’re still going to all those places, but
0:17:58 they’re also going to a lot of smaller towns and cities and different destinations. I think
0:18:03 social media drives that because there’s a lot of new destination discovery on Instagram,
0:18:06 TikTok and others.
0:18:13 So I follow you and I read your earnings releases and you talked about a new feature you guys
0:18:17 are working on called the co-host network. Can you say more about that?
0:18:22 Absolutely. You know, Airbnb, we’re only as good as the homes we have. And, you know,
0:18:26 one of the keys to Airbnb is we want to make sure everything is affordable. Well, let’s
0:18:29 take a city. If a city doesn’t build housing, what happens to the price of housing? It typically
0:18:35 goes up. If we don’t add enough Airbnb’s, then the price of Airbnb goes up. So we need
0:18:38 to add a lot more supply, literally millions and millions more homes we want to add in
0:18:44 the coming years. The number one reason people don’t list their home on Airbnb is because
0:18:49 they perceive it as being too much work. And it is for some people. And let’s say like
0:18:54 you live in New York and you have a summer home in Florida or maybe you maybe use it
0:19:01 in the winter, actually. And you want to put on Airbnb, but you’re not physically there.
0:19:06 So either you can host or you go on Google and you type like, you know, Airbnb property
0:19:11 manager and a third-party property management company that has nothing to do with Airbnb
0:19:16 could take over custody of your property. But why that is a problem is the average five-star
0:19:22 rating for third-party property management Airbnb is only like 4.62, which is not nearly
0:19:27 as high a rating as individual hosts. So we thought, what if we like took a marketplace
0:19:32 approach to this? What if we paired homeowners, people with homes that don’t have time that
0:19:35 want to make extra money with people that have time, they’re really great hosts in Airbnb
0:19:39 and they would like to expand, but they don’t have access to properties themselves. And
0:19:43 so that’s exactly what we’ve done. We built a network of 10,000 co-hosts. These are the
0:19:48 best local hosts. The average rating is 4.85. So these are like great hosts and we’ll match
0:19:53 you with them. And the other thing is not only do we match you, Scott, but we built
0:19:58 this really elegant in a software integration. I think when you get your hands on it, you’ll
0:20:04 hopefully agree that it’s a really beautiful, seamless integration. So they can manage everything
0:20:07 about your Airbnb or just the bookings or just the cleaning or just the checking it
0:20:13 of guests. You negotiate the rate with them. And so, you know, it’s pretty turnkey.
0:20:18 Let’s break down the economics. I own a place in SoHo and I decided, right, I want to monetize
0:20:23 it or I want to get some return on it. And let’s just say, I can rent it out for 500
0:20:29 bucks a night. If I rented out for 500 bucks a night, how much would I typically end up
0:20:33 paying to Airbnb? And how much if I totally wanted to outsource sort of that 500 bucks
0:20:37 would go to a co-host? I’m trying to figure out the net to the owner.
0:20:45 We have a blended take rate of 15%. So now, if you rent it out for $500 a night, you actually
0:20:52 get 97% of it because we withhold 3% and then we add an additional about 12% additional
0:20:57 guest fee. But let’s just keep the math really simple and let’s assume that you’re saying
0:21:02 $500 a night is what the guest pays, right? Just to keep the math simple. So it’s 500
0:21:08 times, you know, 0.15, you know, and that’s 75 bucks. Yeah. So that’s $75. And then, you
0:21:15 know, with a co-host, you’ll probably negotiate between 10, 20, 30% take rate. And it’s basically
0:21:19 what you negotiate and how much they take home. So I think it’s very reasonable even
0:21:28 with a co-host that you could take 60, 70% home. We’ll be right back.
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0:24:46 You strike me as sort of ground zero for a company that could potentially leverage AI.
0:24:51 I want to understand how you’re using AI, where you’ve seen real ROI, where it may have
0:24:58 been overhyped. I’m just curious as a business owner that I imagine is being pitched by,
0:25:02 I imagine you and Sam have had a lot of conversations and that there’s a lot of AI companies that
0:25:05 would love to put out a press release saying we’re the exclusive AI partner, maybe we’ve
0:25:11 already done this with Airbnb, but I would like to get one, how you’re using AI and
0:25:16 two, just as a business person who has real insight into technology, where you think AI
0:25:22 is underhyped or overhyped. I think AI’s long-term impact on society
0:25:28 is perhaps underhyped. I think that anyone that has a child today, the world they’re
0:25:32 going to grow up in is going to be so fundamentally different than they can imagine because of
0:25:37 what happens when computers can essentially think. And I think it’s going to change society.
0:25:43 But I remember in mid-2010s, there was the self-driving car crates. And people were saying
0:25:49 in 2014, 2015 that there would be very few people that would be driving cars, that driving
0:25:53 a car would be anachronistic like riding a horse and you’d only do it if you enjoyed
0:25:59 it. And while that’s probably the long-term truth, we’re almost 10 years post the self-driving
0:26:04 car craze, and it’s still very rare to see a self-driving car on the road. And so I think
0:26:08 the lesson here is that this technology is going to have a much bigger impact on society
0:26:13 than probably we think. But what’s that old saying? You overestimate what you can done
0:26:16 in 10 any year and you underestimate what’s possible in 10 years. I think we in Silicon
0:26:20 Valley do that all the time. We invent a technology and we think society’s just going to adopt
0:26:25 it and it’s going to take a lot longer. And so I think that all of us were way too Polly
0:26:29 Ennis when chat should be launched. And I think we all thought all of our businesses were
0:26:33 going to change in three or four years. And honestly, like if I just like, I don’t know,
0:26:39 here’s a good test. I open my phone, I look at the apps on my home screen and I ask, how
0:26:43 many of these apps have finally changed because of generative AI? And I really can’t say very
0:26:48 many have. Maybe the algorithms are marginally different. There’s some interesting kind of
0:26:52 on the margins filters that are possible because AI, but their experience is not that different
0:26:58 than a pre-AI startup. So I would say if you think about the stack, you’ve got the model,
0:27:03 you get the chips, there’s a lot of development there, mostly just Nvidia. Now there’s a huge
0:27:09 amount of development at the model level. Obviously open AI was the kind of was the frontier model,
0:27:14 but there’s so many others. But there’s been very little innovation on the app front. And
0:27:19 I think all of us are trying to basically figure out, like, what is the application interface
0:27:25 paradigm in a like AI world? One of the comments that Johnny, I’ve made, he’s a designer that
0:27:29 I work very closely with, he designed, you know, almost all the products between iMac
0:27:35 and, you know, iPad beyond. Was he noticed that there was a user interface paradigm of
0:27:40 the graphical user interface formed in the 1970s, popularized in 1980s, basically a mouse
0:27:46 and a point and click. And then you had multi-touch introduced in 2007 with the iPhone. So a lot
0:27:52 of startups are starting to work on these new layers. But, you know, mostly what these
0:27:56 startups are doing is scraping data, the kind of same data that open AI would scrape or the
0:28:00 data that Google would scrape. And they’re just trying to do marginally different interfaces
0:28:06 by doing these kind of pseudo, you know, assistance, but the assistants are very chatbot. And I
0:28:10 think a chatbot is just, you know, you know why I don’t think a chatbot’s the right interface
0:28:15 for the same reason that like I have a messaging app, but I don’t want to use that to do the
0:28:19 calculate, like to do a computation, I want to open a calculator, and I have a different
0:28:23 interface for the calculator. So in other words, I think every job wants a different
0:28:28 interface. And I don’t think we can revert to that like the universal chatbot interface
0:28:32 to be able to handle all these different tasks. It actually is very inefficient. For things
0:28:36 like travel, I don’t think a chatbot is the way to book travel. So that’s like my general
0:28:41 commentary. Now let’s take Airbnb. I think the thing that will first get revolutionized
0:28:46 through AI via Airbnb is customer service. Just to give you a sense, we have a very Scott
0:28:50 very difficult customer service challenge. We get more than 10 million calls in chats
0:28:55 a year. They come from people in every country in the world. And a lot of the calls are urgent,
0:29:00 like I’m locked out, there’s a problem. And we often have to adjudicate disputes between
0:29:05 a guest and a host that don’t even speak the same language. And because we’re a travel,
0:29:10 we have a lot of seasonal workers, right? And so the seasonal workers is a lot of turnover.
0:29:17 And so you often call a customer service agent that is seasonal, and a lot of them are new,
0:29:22 and they’re trying to handle adjudication between guests and hosts. And there’s like
0:29:27 a hundred different policies. And the policies can be like a hundred pages of documentation.
0:29:33 And so AI can be the frontline, it can basically speak every language, it can be 24/7, it can
0:29:37 read the corpus of all your policies, it can also look the last million times something
0:29:43 happened and say, based on that, this is the best predicted resolution. And of course,
0:29:47 it can be a tool for customer service agents to provide better service. So I think customer
0:29:52 service is the first thing that’s going to be reinvented at least in the e-commerce space
0:29:57 because AI. And then I think the question is, can you bring that customer service paradigm
0:30:02 to search? In other words, can search be not a chat bot, but a slightly more conversational
0:30:06 experience where it’s not like the Amazon paradigm where it’s a search box and filters.
0:30:11 But it’s a little bit more this app that’s getting to know you, understanding you,
0:30:14 it’s more personalized. And that would probably be phase two.
0:30:20 I’ve sort of, and I might have this wrong, but I was really just fascinated by the meta
0:30:25 earnings call. I think it was turning calls ago where he said, and I’ve never seen this before,
0:30:30 we’ve increased our revenues 23% year on year while decreasing our headcount 20%.
0:30:35 And what I’ve generally found, the analogy I would use is that AI is a little bit like
0:30:42 corporate ozenthec and that is it turns off the signal we have as managers, CEOs and directors
0:30:47 that just because we’re growing, we need to eat more, or in this case, we don’t need to hire more.
0:30:52 Have you thought, and I realize this is a difficult conversation for CEOs to have,
0:31:00 but has AI given you the sense to maybe rethink if you need more employees and to see how technology
0:31:04 can make you more efficient? And what’s happened to your employee headcount over the last 12 months?
0:31:10 I went through one of the first big layoffs in Silicon Valley since the pandemic. We were
0:31:15 like a well-known layoff. We had to cut 25% employees, but actually we lost like almost
0:31:19 half the employees because we also had to cut 10% of contingent workers. And then when you’re a
0:31:25 travel company, a pandemic, people tend to leave you for other hotter fields or other hotter industries.
0:31:30 So we ran the experiment of having significantly fewer employees against our will. We weren’t
0:31:35 looking to do this. And something remarkable happened. The remarkable thing happened is
0:31:39 that we actually started getting more work done with fewer people. And it was partly because there
0:31:43 was a massive communication tax and that like people weren’t meetings all day. And there are
0:31:48 meetings all day because people create meetings and you can try to impose things, but it was just,
0:31:52 it turned out we had too many people probably. And we never would have realized that until we
0:31:56 kind of ran the experiment of having fewer people. And we actually started getting a lot more done.
0:32:01 So then I, you know, mentioned this to Mark Zuckerberg. And, you know, I’m close to him. And,
0:32:08 you know, I think he kind of realized that, you know, there were a lot of efficiencies to be gained.
0:32:15 And, you know, obviously he made his decisions with this year of efficiency. I think he found
0:32:19 that there was a huge communication tax and that they probably had way too many people.
0:32:24 Now it’s hard for a CEO because you don’t want to always be on the side against hiring people.
0:32:29 I’ll say this. I think that most startups raise too much money. They hire too many people. I don’t
0:32:34 think that has to be against workers. I think that they can just be redistributed to other companies
0:32:39 that we should fund more companies. There should be more startups built, but the startups should
0:32:45 probably not hire so many people. I think that’s a general view I have. AI, I think is making people
0:32:52 marginally more efficient, but I’ve not seen yet a massive displacement of workers because of AI.
0:32:57 You know, whether it’s customer service, we still have mostly agents doing it.
0:33:02 And then software engineering, you know, it can make software developers a lot more efficient,
0:33:07 but it is not reducing our workforce. And actually the way this would probably work
0:33:13 is we’d probably, if AI made everyone more efficient, instead of downscaling the employee base,
0:33:17 we’d probably try to get more revenue per employee. So we wouldn’t be doing,
0:33:22 we wouldn’t be eliminating jobs. We would hope that the revenue per employee would increase
0:33:25 so they have more leverage. And we’re starting to see this. We’re starting to see that,
0:33:30 that like what we’re seeing is our headcount is only growing in low single-digit percentages
0:33:34 a year of a year. And our revenue is growing faster in our headcount. And I’d like that to
0:33:39 continue. And so a metric of revenue per employee or free cash flow per employee,
0:33:43 hopefully will massively increase. We won’t have fewer employees, we’ll just do more revenue.
0:33:48 So you had a bit of a viral moment. You probably weren’t planning this. And I just want to say,
0:33:52 I thought your comments were sort of taken out of context around founder mode.
0:33:58 Talk a little bit about what you meant. And, you know, it kind of, it kind of went wild. Everyone,
0:34:04 my favorite meme was, I’m going to go founder mode on this breakfast burrito, founder mode,
0:34:09 question mark. Let me see this. I’m not sure anyone really knows that founder mode is,
0:34:14 because Paul German essay about it, but you never described exactly what it was.
0:34:18 So let me just give a little of backstory. I was asked to go to see a white,
0:34:23 to white comedy or alumni event. It was the first time they got basically a hundred startups that
0:34:27 are, you know, like around a billion dollar market cap or higher, later stage companies,
0:34:31 they did a basically like a, like a, the quote of a conference, they did different speakers.
0:34:35 I joined last minute. It was off the record. I remember they’d tell me like, they’re going to
0:34:39 do this talk and no one’s ever going to know you did this talk. It’s off the record. There’ll be
0:34:44 no knowledge of it. So I do this talk off the record. And I basically described my experience
0:34:52 from 2009 to 2019 going through hyper grow. But the problem was I was told a certain philosophy
0:34:56 of leadership, which is you hire, you know, hire great people and entrust them and power them to
0:35:01 do their job. And that sounds great. But there was a big missing piece of the puzzle, which was
0:35:06 being in the details and being close. And I had let go. And I noticed this paradox that the more
0:35:11 I let go, the more dysfunctional company got, the more people thought it was leadership meddling.
0:35:15 And so the further I got from the details of the company, and I would hire these people and I thought
0:35:19 they were doing a good job. And I would find out years later, they weren’t doing the job I thought
0:35:25 they were doing because I wasn’t close enough to the job. So I think Paul Graham wrote this essay
0:35:30 was a very compelling essay. I think the theory is a really great way he framed it, that there’s
0:35:34 this orientation that is germane, the founders, which is being in the details, having real ownership
0:35:40 of your company, which is different than a classic manager mode. But to be clear, I never said this
0:35:46 was something exclusive to founders. Basically, the general principle is being in the details.
0:35:52 And in being very, very hands on, and it’s this basic idea that great leadership is not absence,
0:35:57 great leadership is presence. And then the counterpoint is, well, what about like,
0:36:01 isn’t it sound like micromanagement? Isn’t this micromanagement? And no one wants to work for
0:36:07 a micromanager. And here are my two thoughts on micromanagement. Number one, I actually think like
0:36:12 a lot of people are afraid to get in the details could be accused of being a micromanager. And I
0:36:16 actually think a lot more leaders would benefit from being in the details and model more hands
0:36:21 on leadership. But the other thing is what Steve Jobs said, because what I took from founder mode,
0:36:27 a lot of it was what I learned observing Steve Jobs. And Steve Jobs said he didn’t believe
0:36:32 was a man of a micromanager. He said that what I do is I’m in the details, but I’m partnering with
0:36:37 the people. And if you ask johnny, I don’t think johnny, I’ve thought like Steve Jobs, the micromanager,
0:36:41 but Steve Jobs visits the designs to you every single day. They had lunch every single day
0:36:46 together. They were talking Steve was steeped in every detail of the design of the iPhone,
0:36:50 but he wasn’t telling Johnny what to do. They were having discussions, they were partnering.
0:36:54 And I think that’s the key. I remember one time at employee, and they asked me,
0:36:59 is this your decision? Or is this my decision? And I said, that’s exactly the problem. Every
0:37:06 decision should be our decision. This notion of this black and white, like decision making authority
0:37:13 between owner and worker manager and employee is I think the problem that you’re kind of partnering
0:37:18 with people in the details working with them. And so that was probably the single most important
0:37:25 philosophy that is a founder, or as a leader, you set the pace of organization, you set the standards
0:37:31 of of equality, you set the standard of how much you care, you identify excellence, that you work
0:37:36 with the leaders on the ground, and you don’t defer to them, but you don’t tell them what to do,
0:37:40 you’re constantly partnering with them. And the one reason you shouldn’t defer to your leaders
0:37:44 is because oftentimes you’ll have different leaders come from different functions with
0:37:48 different interests, and they’ll conflict. And you’re the only leader, or maybe if you’re a general
0:37:53 manager, you’re one of the ones that can actually consolidate and have the most global view and
0:38:00 make the most macro decision based on all the different inputs. So let’s talk a little bit
0:38:05 about the company and the stock and your public company CEO so you can plead the fifth on anything
0:38:10 here or just say you can’t comment. But your revenue is two and three quarter billion,
0:38:15 most recent quarter, that’s up double digits, that’s up 11% year on year, net income,
0:38:20 over half a million, 555 million representing a net income margin of 20%, which is very healthy,
0:38:28 adjusted EBITDA of about 894 million up 9% year on year, and representative adjusted EBITDA
0:38:34 margin of 33%. These are solid numbers. Airbnb generated a billion of free cashflow in Q2 and
0:38:39 4.3 billion of free cashflow over the trailing 12 months, which is I think the most you’ve ever
0:38:47 done. Now the bad news, since the company went public, it’s first trade to retail investors,
0:38:53 and I figure we went public four or five years ago, it’s effectively flat. If you’ve purchased
0:38:57 the stock, you’re effectively flat. I mean, there’s been some bumps and some ups and downs,
0:39:03 but is this a case of where quite frankly, you went public in a market that was very frothy
0:39:08 and the company is growing into that valuation? At some point investors are going to get,
0:39:11 or shareholders are going to get restless and say, “This is a great company that’s growing.
0:39:16 How come it’s not reflected in the stock price?” What is it, as a CEO, is that you’re going to
0:39:20 continue to block and tackle and just continue to stay the course? Do you think it might involve
0:39:25 acquisitions moving forward? But what would you say to a shareholder who’s been in the stock
0:39:29 the last four years, and quite frankly, it’s underperformed the rest of the market?
0:39:34 I think there’s a couple of things going on. I think that beginning of 2020,
0:39:41 we had a private market valuation of $30 billion. Then the pandemic hit, and we raised debt,
0:39:46 and the warrants were priced at $18 billion. That might be the best proxy for our valuation.
0:39:54 In May of April 2020, we were $18 billion. Then our goal in the summer was to go public
0:39:57 at $30 billion. We don’t want the last round investors to be underwater, so we would like
0:40:03 to clear $30 billion. Then by the time we priced the stock, we priced it at $50 billion. Then
0:40:10 the first day of closing went to $100 billion. That was crazy. It was not what we expected.
0:40:14 I did not think the stock would pop double. If I did, I probably would have increased the issue
0:40:21 price. We probably, at that point, had a valuation that was a little ahead of our numbers. We were
0:40:26 not generating a huge amount of free cash flow. We were not profitable on an EBITDA basis in 2020.
0:40:33 The market was super frothy. Now, there’s this old saying, “You’re never as good as they seem.
0:40:37 You’re never as bad as they seem. We’re really as good as they seem in 2020.” I don’t know.
0:40:41 Maybe we got a little frothy, but we’re certainly not as bad as people say now.
0:40:47 Those that are a little bit cynical of the company, I mean, you mentioned we did over
0:40:52 four billion free cash flow. We have one of the highest free cash flow margins in all of Silicon
0:40:59 Valley. We put out a little bit softer guidance for a quarter, and that really had a huge impact
0:41:03 on the stock price because investors, they’ll forecast the subtle change in growth rate over
0:41:07 the next five or 10 years, and it massively changed your valuation. What I would just say
0:41:15 is the following. I’m 43. I intend to continue to run this company for the coming decades.
0:41:20 I want to build one of the great defining generational companies. I’m spending a lot of
0:41:26 energy taking Airbnb, which was basically a noun and a verb. That’s one vertical and trying to do
0:41:31 what Amazon did in the late 90s, which was take a platform, an e-commerce platform that’s designed
0:41:35 for books and bring it to everything. I think that there’s going to be a massive amount of
0:41:40 category expansion for Airbnb beyond short-term rentals. You’re going to start to see that next
0:41:45 year. We have some really exciting ideas that we’re working on, but beyond that, there’s a huge
0:41:50 amount of growth in our core business. I would just point to a few things. Number one, quality
0:41:56 control. We are now bumping up against the growth rate of what Airbnb can grow. It’s growth rate
0:42:01 without better quality control because we are now an alternative to hotels. A lot of hotel
0:42:06 travelers compare to Airbnb’s, and they want the similar level of consistency and quality.
0:42:11 For every person who stays in Airbnb, nine people stay in a hotel. If we can get one of those people
0:42:15 to stay in Airbnb, we double the size of our business. Then you’ve got international markets.
0:42:20 Most of our business is in six or seven countries. We’re in 220 countries,
0:42:27 but most of our business is in US, Canada, Australia, UK, France. There are so many opportunities in
0:42:32 Asia. There are many countries in Europe, Latin America, where there’s huge growth expansion.
0:42:40 That’s the next frontier. Without revealing your corporate plans, I think of Airbnb loosely as
0:42:44 you’re great at monetizing fallow assets and creating community. That might be the wrong
0:42:51 description, but that’s how I think of it. What are the most monetizable assets? People’s homes,
0:42:58 you’re in that. Next would be commercial real estate. I don’t like apparel. People have tried
0:43:06 that. It isn’t working. I could see private jets. I could see … What am I missing? What are in your
0:43:09 view without giving … Oh, you’re missing the biggest one of all people’s time.
0:43:16 Skillshare? Tell us what you mean by that. What do I say without saying it? There’s a lot of
0:43:22 services that are available that we could go into. Imagine Amazon, they had books, but they went
0:43:27 initially into DVDs and CDs when those existed and then all these different retail categories.
0:43:31 We’re looking at … Let me just break it down for you. You have short-term rentals,
0:43:35 which are corvettes. You have long-term rentals. Long-term rentals will be defined as 30 days
0:43:39 or longer. That’s the same asset, but for longer stays and seasonal, that’s huge.
0:43:46 Then, yes, you do have car rentals and boats and other large assets. They’re not as big as
0:43:51 our house, but those are your next biggest assets to your life. But again, the biggest asset are
0:43:57 people’s time. Services and experiences would be a big opportunity for us. As far as going down the
0:44:03 list of those categories, there are dozens and dozens of categories, but I’ll start to accidentally
0:44:10 talk of and reveal our new product if I do that. Just a double-click on that. I’m outstanding at
0:44:16 installing energy-efficient HVAC and I’m in Delray Beach. I’m very good at installing solar panels
0:44:22 or installing soapstone, kitchen counters, and homes that need this. My problem is new business.
0:44:28 Can I see an environment where I put my services and pictures and photos similar to the way you
0:44:33 would advertise an apartment on your platform and you bring them a bunch of business and assure
0:44:39 a certain level of quality in exchange for that 15% fee everybody wants? Is that a logical extension?
0:44:44 That’s a logical extension. It wouldn’t be the first extension. We would probably start with things
0:44:50 a little more adjacent to travel and to hosting an Airbnb. But down the road, almost any type of
0:44:54 service, I don’t want to say almost any type of service, but many services including building,
0:45:02 maintenance, cleaning, interior design, up-tape your property. We built the COS platform. This
0:45:08 COS network we built, we took lessons from Amazon. The lesson from Amazon is don’t pull the book
0:45:14 marketplace based on ISBNs, build an abstracted marketplace where you can sell diapers and books
0:45:19 and a number of things on the same platform. That’s what we’ve done. We basically re-architected
0:45:25 entire platform. There’s many services that could use the COS network. Then on the demand side,
0:45:30 I’ll probably stop there because there’s, but you’ll see, there’ll be more things coming.
0:45:37 When you’re thinking is kind of 2025, the year where you start rolling out and testing it?
0:45:41 Every year, I made a statement on the earnings call. I believe I can stick with it,
0:45:46 which is every year for now on, we’re going to launch two to three new businesses or verticals
0:45:49 that we believe will one day generate an incremental billion dollars of revenue or more.
0:45:55 You’re going to start to see those next year. Will you do this organically, or will you make
0:45:59 small token acquisitions to give you a head start? Primarily organically. The reason why is because
0:46:04 similar to Apple, when Steve ran it, we’re a functional organization. It’s kind of difficult
0:46:10 organization to plug in businesses because then they become divisions. But if they’re small
0:46:15 acquisitions or it’s extremely compelling, we’ll always take a look at it. I will just say a lot
0:46:19 of entrepreneurs really want to work with Airbnb. They’re very motivated. I think we have a very
0:46:25 entrepreneurial culture, especially for an SMB 500 company. So it is a very appealing place for
0:46:32 an acquisition candidate. Well, let me just ask you this. You’ve got a $85 billion market cap,
0:46:39 I’m sorry, $84, $85 billion market cap. Lyft, the number two has a $6 billion market cap. So
0:46:44 you’d have to pay a premium of $8 billion for 10% dilution. Why wouldn’t you take a flyer and become
0:46:51 the number two and then maybe the number one in terms of sharing or monetizing people’s cars?
0:46:57 I mean, these are like, I think there’s a lot of opportunities. One of the frameworks that
0:47:02 Jeff Bezos had, I think, is this IDF perishable, non-perishable opportunities. And I think doing
0:47:06 an acquisition, most of these acquisitions are not perishable. I mean, maybe someone else could
0:47:11 take them out. But we generally think that we want to get a little more momentum in the core
0:47:16 business, get to a little bit larger scale before we try to absorb large companies and large
0:47:20 acquisitions. So that’s kind of why we’ve tried to build our muscle. Having done acquisitions in the
0:47:26 past, they’re very, very time consuming. I think acquisitions benefit larger corporations because
0:47:32 they can absorb the acquisition, right? I think of smaller company struggles with just the administrative.
0:47:37 You think of yourself as a small, you’re $84 billion market cap, you’re by far and away the
0:47:43 largest hotel company in the world by number of rooms, growth. You have solid EBITDA. It’s just
0:47:47 funny that you think that way. I would think that… We’re a baby compared to what we’re going to become.
0:47:52 And by the way, we only have 7,000 employees or so. I think Uber has like 30,000. So yeah,
0:47:56 maybe today they’re double the market cap, but they also have like four to five times the number
0:48:01 employees. So we’re actually a smaller company from an employee base than people realize. We try
0:48:06 to build like this, not a Navy, but like the Navy SEALs, this lean elite group. But I think this
0:48:10 is just the very beginning. Like I got to tell you, Scott, I’m 43, but I have more energy,
0:48:14 more motivation and more passion. That was when I was 26 and I was running this company.
0:48:18 And I just see endless opportunity for this company. I think we’ve done a lot of the hard work
0:48:23 to rebuild our company from the ground up, to be prepared for this next phase where we can take
0:48:28 Airbnb and bring it to more business models around the world. So I mean, yeah, it’s just,
0:48:34 maybe it’s a mindset, you know, Jeff, like Steve Jobs said, Apple’s the world’s biggest startup.
0:48:39 And I think you know what he means by that. Jeff Bezos had his version, he called it day one.
0:48:44 It’s all basically is the road in front of you longer than the road behind you. And for us it is.
0:48:50 So I pitched you on this idea privately 18 months ago and the set of limitations are over so I can
0:48:56 pitch it to you publicly. But Airbnb plus or whatever we call it, and I pay 50 bucks a month
0:49:02 and it does a few things. One, when I’m in a city, I have access to cool gyms like an Equinox or
0:49:10 whatever. I have access to concierge services. But more than anything, it’s a thinly veiled
0:49:17 aspirational community slash dating site. And that is I travel so much. And when I’m in a town,
0:49:22 I’m almost always alone. And I find myself at five or six or 7pm thinking, I don’t know what to do.
0:49:26 And if there were other entrepreneurs, if there were other academics, if there are other people
0:49:33 from New York or just locals, what about some sort of Airbnb plus community offering?
0:49:39 I think it’s incredibly compelling. I think you sold me. I’m in. Listen, 18 months ago I was in when
0:49:44 you told me. And the only reason we haven’t done it is because we had really foundational things.
0:49:48 People were complaining about Airbnb’s aren’t affordable. They were complaining about our
0:49:52 customer service. They were complaining about like there were a lot of things. There were a lot
0:49:56 of complaints. And so I felt like, well, we got we got to get our house in order. We still have
0:50:01 to grow into this valuation. We have to generate a real consistent profit on a free casual basis.
0:50:05 And we have to address a lot of these issues that customers are brought up. And over the last two
0:50:11 years, we made 430 upgrades and improvements. So yes, we are now looking for this expansion.
0:50:16 I’ve always believed that there was some type of Airbnb membership model, not necessarily a points
0:50:21 program, but where you get access. And I guess my only question back to you is, are you available
0:50:28 as an advisor? Oh, Jesus Christ, Brian, you’re so full of shit. I’m always available. I love this
0:50:33 company. We’re going to talk privately after this. But I think it’s a great idea. And I generally do
0:50:39 see Airbnb as a community. I mean, like in, you know, Berlin tonight, there are tens of thousands
0:50:44 of Airbnb people that are staying there. We can match them together. They can do variety things.
0:50:48 Those local businesses would love to have specific travelers and they could tell us what
0:50:53 travelers they want. And we could target just those travelers. I think there’s a social overlay
0:50:58 here. And that is, I think that there’s a crisis or an epidemic and loneliness. 100%. And young
0:51:05 people aren’t connecting in a safe environment where they want to know each other and want to
0:51:10 establish professional and personal relationships. There’s a lack of third spaces. You know, people
0:51:15 aren’t going into work. They aren’t going to church. They are participating in organized athletics as
0:51:20 much. And I think that you guys are in a position to provide third spaces on a pretty big scale.
0:51:24 Look, now I’m going to sound like your mother here. Last time you were on the show, you spoke
0:51:31 about feeling like a 61 year old and you were 41 there. So 43 year old’s body working 18 hours a
0:51:38 day, essentially living like a monk during the pandemic to scale Airbnb from 18 to 85 billion.
0:51:44 So over a year later, have you been able to make strides in reconnecting with your personal side
0:51:47 of your life? Do you found as if you found more balance or is this still kind of an ongoing
0:51:53 journey? No, it’s been a major change for me. Kind of three changes. The first change is I’ve
0:52:00 gotten much healthier. I was always into exercise, but I’ve, I think a lot of entrepreneurs, we
0:52:05 glamorize sleep deprivation. And I think until recently, no one was talking about the benefits
0:52:09 of sleep. But I think only five last five or 10 years, but the truth, when I started, like,
0:52:14 it was a badge of honor to never sleep. And I do that for years. And, you know, we didn’t really,
0:52:20 like, we weren’t that healthy. And I’m, I’m much more healthy. Now I’m sleeping more exercising.
0:52:23 And I think, I think that’s a good trend in Silicon Valley that like people seem to be
0:52:27 much more mindful of health and fitness. That’s the first thing. Second thing is I’m spending a
0:52:31 lot more time with friends. And I, one of the things I do with friends is I travel, you and I
0:52:36 talked about like one of the great ways to have a shared experience is to travel with people.
0:52:42 And like that’s a great form of memories. And I do that. And then I’ve started to, the third
0:52:47 category is like, I’m single and I’m 43. And then I’ve waited longer than ever thought I would to
0:52:51 meet someone and have a family, but I do desire to have a family. And so I’ve been dating a little
0:52:56 bit. And, you know, hopefully I meet someone. And you also said on the professional front,
0:53:01 you talked about your desire for Airbnb to have a next act, your Disneyland, your AWS, your iPhone
0:53:07 moment. Give me a moonshot crazy idea that you wouldn’t, people wouldn’t expect from Airbnb or
0:53:11 Brian Chesky. There’s so many, but I’ll just pick one based on the coverage who’s had loneliness.
0:53:17 People are lonely. I think there’s a massive way that we can facilitate people meeting one
0:53:23 another. So I’ll give you an example. If you travel by yourself, you ever go to a restaurant,
0:53:26 you got to eat at the bar by yourself and sometimes all the time. It’s literally one
0:53:32 of my favorite things and it’s pathetic. Yeah. Yeah. And I do it too, actually. You know,
0:53:37 I do go to the bar and sometimes by myself get food and I like it, but I have no alternative.
0:53:41 Like if I’m traveling by myself, that’s the only choice. So what if we could basically pair and
0:53:46 meet travelers together at restaurants, pre book reservations, and bring travelers together?
0:53:53 Taylor Swift, number two, she like, obviously had this incredibly, unprecedentedly successful
0:53:59 concert tour. And we noticed in Europe, where sure concert was, we saw this massive rise in
0:54:05 Airbnb bookings. And what if you could pair check, what if you could sell concert tickets on Airbnb,
0:54:09 but not to sell concert tickets, but you could actually pair people together to go to the concerts,
0:54:14 they can meet one another. We could go down the list of other types of things like pick up sports.
0:54:19 So there are kind of things you might not think of as Airbnb, but if we’re talking about difficulty
0:54:24 meeting one another, there’s a lot of ways we can pair people together. So I think the most
0:54:30 not obvious biggest idea would be Airbnb becoming like a social network in the physical world,
0:54:34 not an online social artwork, but essentially a physical social network where we’re matching
0:54:39 people together in real life around events and shared experiences. God, I just thought you should
0:54:45 take on live nation. By the way, I love the idea of you sitting alone at a bar and everybody being
0:54:50 like, isn’t that Brian Chesky? By the way, you know what I call when I see, I’m not young nor
0:54:53 a billionaire and not as good looking as you. You know what I call eye contact at a bar when I’m
0:55:01 meeting alone? What? A prostitute. Oh. Anyways, there you go. All right, Brian. Brian’s literally
0:55:06 turning B red. Yeah, what a great way to land this interview. This is great. He’s literally
0:55:12 turning B red here. Brian Chesky is the co-founder and CEO of Airbnb since launching in 2007. The
0:55:16 firm has grown to a community of over 5 million hosts who have welcomed more than 2 billion
0:55:21 guests in almost every country across the globe. He joins us from New York. Brian,
0:55:26 you know I’m an enormous fan of you. I think you’re not only a baller professionally in the
0:55:31 world of tech, but I think you’re just generally speaking a good person and think about the common
0:55:35 wealth and what’s good for society. And we don’t always have that peanut butter and chocolate
0:55:40 combination. So thanks for your time, Brian. Oh, thank you so much, Scott. Thanks for having me.
0:55:55 Algebra of happiness. My sister and I have put my father into hospice and hospice is a scary
0:56:00 sounding word. Jimmy Carter’s been in hospice for five years. It’s basically saying we’re not going
0:56:04 to continue to shuttle him to the hospital. If something goes wrong, we’re just going to try
0:56:09 and make him as comfortable as possible. And my father’s 94 and has declined pretty significantly
0:56:14 in the last two and a half months. He had a series of very weird bladder infections and UTIs that
0:56:19 just took it out of him. And the last time I went down there and it was coming, he didn’t recognize
0:56:24 me. And I saw him about two months ago and we had a conversation and then two months later,
0:56:28 he’s like a baby and he doesn’t recognize me, which is obviously very much prepared for it,
0:56:32 but you can’t really prepare for it. Just a couple takeaways. Something I’m really happy about
0:56:38 is I knew the end or that end where I would no longer have my father or he would have me in
0:56:43 terms of consciousness was coming. And I said a lot of nice things to my father and I made sure
0:56:49 that he felt loved. And I’ve also about 25 years ago, one of the best decisions I’ve ever made is
0:56:53 that I’ve always thought of relationships as transactions. And my father wasn’t very involved
0:57:00 in my life and I resented him for it. And then I decided across all my relationships that I was
0:57:06 just going to decide, okay, don’t keep score. What kind of what kind of partner, what kind of father,
0:57:10 what kind of son do you want to be? And I decided I wanted to be a generous and loving son,
0:57:17 distinct of what I thought his contribution was. And also I was a little bit hard on my father.
0:57:21 I think when you’re the child of divorce and you live with your mother, you have a tendency to
0:57:27 you know, is it sanctify or deify your mother because she’s taken care of you and making your
0:57:34 breakfast and demonize a little bit dad because you know, it was his fault. And my dad, divorce
0:57:40 really kind of was his fault. But look, the thing you got to think about your parents, what I
0:57:47 realized, come to realize is that their number one job is to be a better dad to you than their dad
0:57:51 was to them. And I found out at a much older age, my dad never said this to me that my father was
0:57:57 abused by his father physically abused. His father was an alcoholic and used to come home and get
0:58:03 this, wake him up, start yelling at him and beat him. And I just think about Jesus Christ, talk
0:58:07 about trauma that might not make you a wonderful dad. And my dad did try. It wasn’t always there,
0:58:13 but he did try. And so I forgave my dad 25 years ago and said, I’m just going to be a generous,
0:58:18 loving son. And I’ve been that number. I’m really glad I was that that gives me a great deal of
0:58:25 comfort. The other takeaway is that it’s so wonderful to have siblings in this situation.
0:58:30 My sister handles all the logistics and makes the millions of decisions you need to make every day
0:58:36 when your father’s not doing well. And it’s actually brought us brought us closer. And I can’t
0:58:41 imagine how difficult it can be for siblings that don’t get along, or one contributes more than the
0:58:45 other and the resentment and the martyrdom. And, you know, some people just don’t show up.
0:58:50 And I handle the money side of things because I’m blessed on that end, which is important.
0:58:56 And it’s, it’s a sad reality here. It is just so goddamn expensive. And so if you’re in a position
0:58:59 where you’re making some money and you have aging parents, you may want to think about
0:59:03 the costs that are going to be involved there. And if you can’t, otherwise they’re going to have to
0:59:08 live with you. But let me just try and land this plane. I didn’t know where this was going to go.
0:59:17 I decided to put the scorecard away and be a generous, loving son. And that was the right call.
0:59:23 This episode was produced by Jennifer Sanchez and Caroline Chagrin. And Drew Burroughs is our
0:59:27 technical director. Thank you for listening to the Prop G Pod and the Vox Media Podcast Network.
0:59:33 We will catch you on Saturday for No Mercenome Alice, as read by George Hahn. And please follow
0:59:38 our Prop G Markets Pod wherever you get your pods for new episodes every Monday and Thursday.
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0:01:23 Let’s talk about flying.
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0:01:56 Welcome to the Prof. G. Podd’s Office Hours.
0:01:58 This is the part of the show where we answer your questions
0:01:59 about business, tech, entrepreneurship
0:02:02 and whatever else is on your mind.
0:02:04 If you’d like to submit a question,
0:02:05 please email a voice recording
0:02:08 to officehours@profgmedia.com.
0:02:10 Again, that’s officehours@profgmedia.com.
0:02:11 First question.
0:02:16 – Hey, Prof. G, it’s Anthony from Pittsburgh BA.
0:02:18 I’m currently six years into a career in human resources
0:02:21 with experience in both public and private sector.
0:02:25 From your perspective, what impacts will AI
0:02:27 and automation have on human resources,
0:02:29 particularly with employee relations?
0:02:33 Love the pod, love the book, keep up the good work.
0:02:34 Thank you.
0:02:36 – I think it’s gonna have a huge impact.
0:02:39 AI is crawling all existing data,
0:02:42 which means that AI wants to take the arc of history
0:02:44 and move it forward on the same arc
0:02:46 and there’s been tremendous bias in the workplace
0:02:47 so that bias is reflected.
0:02:49 What has been done about this legislation
0:02:51 in an effort to root out potential bias
0:02:53 in hiring and promotion software,
0:02:55 New York City became the first city in the country
0:02:57 to regulate the use of automation and AI
0:03:00 and hiring decisions with NYC 144,
0:03:03 a law that went into effect earlier this year.
0:03:04 Still, this law has been described
0:03:09 as a public disclosure law, not an anti-bias law.
0:03:11 Under the new law, companies will need to review
0:03:12 any software that plays a major role
0:03:16 in hiring or promotions and publish adverse impact ratios,
0:03:18 as in data showing whether the software affects
0:03:20 certain races or genders more than others.
0:03:21 Don’t see how you can enforce that.
0:03:24 Anyways, employers are also required
0:03:26 to post these impact ratios on their websites,
0:03:28 including to notice that they’re using the tools
0:03:31 and an option for job seekers to request an alternative
0:03:33 to make screen by the software.
0:03:34 If businesses don’t follow these rules,
0:03:37 they could pay fines of up to $1,500 per day
0:03:38 for each violation.
0:03:40 Yeah, that means fucking nothing.
0:03:42 Big tech is like, finally, do whatever we want,
0:03:43 send us a bill.
0:03:46 I don’t know if this legislation is going to work.
0:03:48 I don’t, it seems to me to be pretty easy
0:03:50 to cover your ass saying, yeah, we use technology,
0:03:52 but it didn’t impact our hiring.
0:03:54 I used a form of organic intelligence
0:03:56 around hiring in my last firm, L2.
0:03:58 We did a ranking of all the people
0:03:59 who was really adding the most value.
0:04:02 And we took the top 10 that were really the culture carriers
0:04:03 working really hard, great with clients,
0:04:05 could trust anything they did.
0:04:08 And what we found are the commonalities
0:04:09 through all of them was three things.
0:04:12 One, they went to world-class universities.
0:04:14 You don’t like to think that the current narrative out there
0:04:16 is it doesn’t matter, go anywhere you want.
0:04:17 It doesn’t matter what school you go to.
0:04:20 Yeah, it does, ’cause effectively the primary value
0:04:22 out of the elite universities is their admissions department
0:04:24 ’cause they get so many applications.
0:04:27 They can select these freakishly remarkable people
0:04:29 and the children of rich kids.
0:04:30 But when you get someone out of UVA,
0:04:32 when you get someone out of Georgia Tech,
0:04:34 they generally just have their shit together
0:04:35 and they’re very good.
0:04:36 That was number one.
0:04:38 Number two, they were athletes.
0:04:42 Yeah, learning how to lose, learning a certain level of grit,
0:04:45 learning how to play with others, discipline.
0:04:48 Our best employee has had a background in sports.
0:04:51 And then finally, this is the interesting one,
0:04:52 they were women.
0:04:53 It wasn’t, you had to have all three.
0:04:55 We generally tried to have two of the three.
0:04:57 You know, some people don’t play sports, that’s fine.
0:04:59 Some people didn’t go to the university, that’s fine.
0:05:02 But generally speaking, we found the best employees
0:05:04 had checked all three of those boxes.
0:05:05 Isn’t that interesting?
0:05:06 Isn’t that interesting?
0:05:10 Anyways, I think AI should be incorporated into HR.
0:05:12 AI is coming for everything.
0:05:15 Be the ninja warrior in AI who has the ultimate weapon
0:05:19 and that is a really facile, deep understanding of AI.
0:05:20 Thanks for the question.
0:05:22 Question number two.
0:05:25 – Hey Scott, I appreciate you taking the question.
0:05:27 I’m a 31 year old college dropout
0:05:30 who’s been fortunate enough to build a career
0:05:31 for themselves in tech.
0:05:33 I taught myself programming
0:05:35 and eventually found my way into product management.
0:05:39 By the age of 28, I was earning about $200,000 a year.
0:05:42 While I attribute that mostly to my negotiating abilities
0:05:45 over my actual merits, at that point in my life,
0:05:48 it felt like I unlocked a cheat code and figured out a way
0:05:50 to make a high income
0:05:52 while avoiding significant student debt.
0:05:55 And then in 2023, all of that got flipped on its head
0:05:59 and I along with about a quarter million tech employees
0:06:01 found myself looking for a new role.
0:06:02 Over the past 18 months,
0:06:06 with the exception of a couple of one-off paid consulting gigs,
0:06:09 I’ve struggled to find a meaningful source of income.
0:06:12 And so my question to you is this,
0:06:14 if you were a young Scott Galloway today,
0:06:18 entering the job market with how hyper competitive it is,
0:06:20 with the ever increasing cost of living
0:06:22 and cost of higher education,
0:06:26 and with AI making the future of work fairly ambiguous,
0:06:29 what would your approach look like?
0:06:32 How would you approach it differently than you did
0:06:34 when you were starting your career today?
0:06:37 And lastly, asking for a friend,
0:06:41 what advice do you have for a 31 year old college dropout
0:06:43 who is struggling to write the next chapter
0:06:45 in their adult working life?
0:06:48 I appreciate your time, thanks.
0:06:50 – So the first one is forgive yourself.
0:06:52 You’ve recognized a lot of success,
0:06:54 you’ve made a lot of money and now you’re not
0:06:55 and you’re facing your sort of first,
0:06:57 what I call professional crisis.
0:07:00 The only thing I can guarantee anybody
0:07:02 is that they’re going to face a crisis like this.
0:07:04 Keep in mind, everyone you talk to,
0:07:05 regardless of the bullshit narrative
0:07:08 of how amazing they are and amazing their life has been,
0:07:10 has been where you are right now.
0:07:13 So the first is forgive yourself.
0:07:14 The second thing we’re going to do
0:07:16 is we’re going to put together a kitchen cabinet of people,
0:07:18 we’re going to reach out and ask for help
0:07:20 and say, handling for a job, I’d love some advice.
0:07:22 If they obviously have contacts
0:07:23 or can keep their ears open, great,
0:07:24 but more than that, say to them,
0:07:26 I would just like someone to check in with
0:07:28 and make sure I’m doing the right things.
0:07:31 Third, we’re going to do three or four things every day.
0:07:33 We’re going to stay fit, we’re going to stay,
0:07:34 we’re going to use that for mental fitness,
0:07:36 whether that’s running, whether that’s yoga,
0:07:39 whether that’s meditation, whether that’s lifting weights,
0:07:42 but you’re going to keep sort of your mental wellness
0:07:44 shit together, right?
0:07:45 You obviously understand technology,
0:07:47 you understand how to do projects,
0:07:51 whether it’s trying to lean into AI, whatever it might be.
0:07:53 Also, we’re going to take advantage of what our strengths are.
0:07:55 One of your strengths, it sounds like to me,
0:07:56 because you’re so young
0:07:58 is you probably don’t have dogs or kids.
0:08:00 So you want to be open to moving elsewhere.
0:08:03 And that is if you were living in a blue state
0:08:07 that was expensive making, I think you said 200 grand a year,
0:08:10 you might be able to take a job making 120 grand a year
0:08:13 in St. Louis or Atlanta or Nashville
0:08:15 because the cost of living is so much lower,
0:08:19 but lean into the fact that you might be mobile, if you will.
0:08:20 Go on every interview.
0:08:23 Don’t let perfect be the enemy of good.
0:08:25 What you don’t want to do is be out of the job market a year,
0:08:26 passing up opportunities
0:08:29 ’cause they weren’t exactly the right thing.
0:08:31 But I would put together a kitchen cabinet of people
0:08:33 every day, three or four emails to strangers
0:08:35 or people we have some sort of contact with
0:08:37 or who you used to work with.
0:08:39 Write down a list of everyone you worked with,
0:08:42 you had a good relationship with, track them down,
0:08:43 tell them your situation
0:08:47 and see if they have any job openings, hit job boards,
0:08:49 start sending out resumes, be aggressive.
0:08:52 It’s a bit of a numbers game, right?
0:08:54 But let me circle back to where I started.
0:08:55 Forgive yourself.
0:08:57 You’re going through what everyone has gone through.
0:09:01 In terms of specific industries, it’s hard to predict.
0:09:03 My current thinking right now
0:09:05 is the industry that’s most ripe for disruption
0:09:07 is healthcare at the hands of AI.
0:09:11 It has grown costs faster than inflation for 40 years
0:09:12 with no underlying innovation.
0:09:14 We’re actually living less longer.
0:09:16 I mean, if you’re rich, this is the best city in the world
0:09:18 or best country in the world for healthcare.
0:09:20 The bottom 90, it’s not.
0:09:22 And I think AI is gonna do incredible things there.
0:09:25 So maybe think about taking a lower salary
0:09:27 and going into a startup in a place like healthcare.
0:09:29 But look, you have technical skills.
0:09:30 You understand technology.
0:09:31 You have real skills.
0:09:34 I can hear in your voice that you are articulate.
0:09:36 You sound confident.
0:09:38 And again, recognize you are exactly
0:09:42 where the most successful people in the world
0:09:44 have been several times.
0:09:45 Appreciate the question.
0:09:49 We have one quick break before our final question.
0:09:50 Stay with us.
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0:11:09 The internet makes it possible to find answers
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0:11:43 Personally, I’d be interested in hearing from Martha Stewart.
0:11:45 I wanna know what she thinks.
0:11:47 And also, Martin Scorsese did something on filmmaking.
0:11:49 Am I a filmmaker? No.
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0:13:09 – Welcome back, question number three.
0:13:10 – Hey Scott, I’m gonna comment
0:13:12 on your favorite subject, you.
0:13:14 Thanks for everything you do,
0:13:17 and for being vulnerable and discussing the hard stuff
0:13:21 about being a man, and more importantly, being a dad.
0:13:24 Your comments about taking body blows as a parent,
0:13:27 and the need to feel like a dad in a Hallmark commercial,
0:13:30 let during your last podcast, that really hit home.
0:13:35 They were basically a body blow in and of themselves for me.
0:13:37 As a father of a 12-year-old daughter
0:13:39 and a 16-year-old son,
0:13:41 I’m working through exactly what it means for me
0:13:44 to be a dad during those years.
0:13:45 You’re bang on.
0:13:48 It’s certainly not at all what I imagined.
0:13:50 And while they’re tremendous kids,
0:13:52 as a dad, I can’t help but feel as though
0:13:54 I’m missing something due to the fact
0:13:57 that relationship is not two-way,
0:13:59 or as you said, I’m really struggling
0:14:03 with this debtor relationship as they become themselves.
0:14:05 I understand this is a healthy
0:14:07 and necessary process for my kids,
0:14:09 but I can’t shake this feeling
0:14:11 that I’m still doing something wrong
0:14:13 due to the fact that my kids want to share
0:14:15 so little of their lives with me.
0:14:18 Any suggestions you might have
0:14:21 to make this next stage of parenting a little easier?
0:14:23 How do I learn to accept my role
0:14:25 as a debtor in this relationship
0:14:27 and find new ways to enrich my relationship
0:14:31 with my children in this new landscape?
0:14:35 Thanks so very much for your wisdom, Colin in Canada.
0:14:37 – Hey, Colin in Canada.
0:14:42 So I hear you said every dad anywhere.
0:14:47 I grew up thinking that my can’t wait to my kids
0:14:50 watch World War II history documentaries with me
0:14:51 and come with me to CrossFit
0:14:53 because they’re gonna find me so impressive
0:14:55 and want to be like me,
0:14:57 that they’re gonna just be naturally really
0:14:59 into anything I’m into.
0:15:02 I mean, thinking a lot about the notion of masculinity
0:15:05 and the ride of passage when a boy becomes a man.
0:15:06 And I love what Richard Reeves,
0:15:09 the president of the American Institute for Boys and Men says
0:15:11 he uses this concept of surplus value.
0:15:13 And I’ve actually sat my boys down
0:15:14 and explained this concept.
0:15:16 And I said, okay, right now
0:15:17 there’s all these people at your school
0:15:21 trying to help you damage the muscle in between your ears
0:15:22 so that it grows back stronger.
0:15:23 You’re not doing a lot for them.
0:15:25 Your parents are paying them some money
0:15:27 but you’re not adding a lot of value there.
0:15:30 You are in a society that for the most part
0:15:31 really values children.
0:15:32 We’re living in London right now
0:15:34 and they spend a lot of money such that
0:15:36 you can have the tube to go to school.
0:15:38 They spend money on building malls.
0:15:40 You can go play mini golf or whatever it is
0:15:42 and you’re not adding a lot of value back.
0:15:43 You’re not making any money.
0:15:45 You’re not paying any taxes.
0:15:46 We love you immensely.
0:15:48 We think about you all the goddamn time.
0:15:51 We’re constantly thinking about the lunch
0:15:54 and filling out the form so you can go on field trips.
0:15:55 We’re constantly thinking about ensuring
0:15:56 that you have the right pillows
0:15:58 ’cause one of my kids is allergic.
0:16:01 We’re just constantly working on you
0:16:04 and you are not constantly working and thinking about us.
0:16:06 It’s negative value.
0:16:10 How you become a man is you start adding more and more value
0:16:11 and when you become a man
0:16:14 is when you flip to the credit side, is that right?
0:16:16 You add surplus value.
0:16:19 And that is you start doing more for other people
0:16:21 and I do little things called what a man does
0:16:23 and that is I say, okay, when visitors show up,
0:16:25 a man immediately jumps to his feet,
0:16:28 goes and gets their luggage and puts it in their room.
0:16:31 A man pours as soon as new water comes to the table,
0:16:35 a man looks around and pours water in empty glasses.
0:16:38 A man when he’s with women pays for everything.
0:16:41 If that sounds sexist as it is, I don’t care.
0:16:45 I still think men should pay for women in almost any context.
0:16:48 And at some point, I say,
0:16:49 you’re gonna start adding surplus value.
0:16:52 Hopefully, some men never do.
0:16:54 Some men raised in environments where they’re coddled.
0:16:56 They never get to a point of adding more value
0:16:58 than they’re taking from the government,
0:17:01 from their friends, from their family.
0:17:03 And I think part of being a man, quite frankly,
0:17:05 or part of being a father is to be blunt.
0:17:09 We get less than we give
0:17:11 and there’s a certain reward in that.
0:17:13 We take blows.
0:17:15 Quite frankly, I’m sometimes devastated by the fact
0:17:17 that I try so hard with my kids.
0:17:20 I call my kids every night at the same time.
0:17:22 You think they’d start to figure it out.
0:17:23 I FaceTime them.
0:17:25 I try to do these workouts with my oldest.
0:17:30 I try to check in on my son and see what’s going on with him.
0:17:32 And on a regular basis, my son doesn’t pick up.
0:17:33 And I don’t hear from him.
0:17:36 Even though he knows I’m calling him at 9 p.m.
0:17:39 My youngest sometimes, when he picks up the phone says,
0:17:41 literally picks up the phone like this, what?
0:17:43 What?
0:17:44 Well, I was just calling to check in.
0:17:45 Oh, okay.
0:17:47 And he’s doing something else, checking out his hair
0:17:50 in the reflection or on,
0:17:53 I can tell he’s on some sort of app or something.
0:17:54 I think at the end of the day,
0:17:57 the best advice I can give any father is just time.
0:17:59 And that is, I hate the notion of quality time.
0:18:01 I think that was invented by men
0:18:02 who don’t spend a lot of time
0:18:04 with their kids to feel better about themselves.
0:18:05 There’s no such thing.
0:18:07 The thing about those key moments
0:18:09 when you kind of connect with your kids
0:18:12 is that you’re in the car taking them to school
0:18:14 and they just sort of tell you something
0:18:17 about someone they like or they ask you a question.
0:18:20 That’s kind of the garbage time.
0:18:22 Or Ryan Holiday from The Daily Stoic
0:18:24 taught me this term, garbage time.
0:18:25 Try and find as much garbage time
0:18:27 with your kids as possible.
0:18:30 I think at the end of the day, what they’re gonna remember,
0:18:32 you know, maybe you weren’t a great dad
0:18:34 or you were a dork or, I don’t know,
0:18:36 they didn’t think you were cool, whatever it might be.
0:18:39 But they will remember that you were there,
0:18:40 that you were there.
0:18:41 And then I would also say,
0:18:43 I thought my kids would be into the things I was into.
0:18:46 And what I realized is if you want to be a good dad,
0:18:47 first you have to get them into something,
0:18:49 whatever it is they take to, ceramics.
0:18:52 My kids got really into Premier League football.
0:18:54 I am not interested in sports,
0:18:57 but now I go to Premier League football all the time.
0:18:59 And I find games in different cities.
0:19:02 I try and do one trip alone with each of them,
0:19:03 and we go together.
0:19:05 I’m leaning into what they’re interested in,
0:19:06 because you realize if you don’t lean
0:19:07 into what they’re interested in,
0:19:10 you’re just not gonna have that much overlap.
0:19:12 I was asked to speak at my kid’s school
0:19:14 in front of his whole class,
0:19:17 and he said he might not be comfortable with me doing that.
0:19:19 He thinks it would be embarrassing.
0:19:22 That was like a spear through my fucking heart.
0:19:24 A chance to like demonstrate what I do
0:19:27 and I’m good at it in front of my son and his classmates.
0:19:29 That was just so exciting for me.
0:19:31 And he’s decided I’m kind of embarrassing
0:19:32 and he doesn’t want me there.
0:19:35 Literally like a spear through my fucking heart.
0:19:36 But that’s what we do.
0:19:37 We take those spears.
0:19:39 We add surplus value.
0:19:41 We acknowledge we’re not gonna get as much back
0:19:42 as we put in.
0:19:44 And why do we do that?
0:19:46 Because we’re men, and that’s what men do.
0:19:49 That’s all for this episode.
0:19:50 If you’d like to submit a question,
0:19:51 please email a voice recording
0:19:54 to officehours@proptimedia.com.
0:19:57 Again, that’s officehours@proptimedia.com.
0:20:00 (air whooshing)
0:20:06 (upbeat music)
0:20:09 – This episode is produced by Jennifer Sanchez
0:20:10 and Caroline Shagren.
0:20:12 And Drew Burroughs is our technical director.
0:20:13 Thank you for listening to the PropG Pod
0:20:15 from the Vox Media Podcast Network.
0:20:16 We will catch you on Saturday
0:20:19 for “No Mercy, No Malice” as read by George Hawn.
0:20:22 And please follow our PropG Markets Pod
0:20:24 wherever you get your pods for new episodes
0:20:26 every Monday and Thursday.
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0:00:47 About a year ago, two twin brothers in Wisconsin discovered,
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0:00:59 Meanwhile, a YouTuber in Brooklyn found himself less interested in tech YouTube
0:01:01 and more interested in making coffee.
0:01:05 This month on The Vergecast, we’re telling stories about these people
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0:01:13 and new ways to make content about those businesses.
0:01:15 Our series is called How to Make It in the Future,
0:01:18 and it’s all this month on The Vergecast, wherever you get podcasts.
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0:01:54 Welcome to Raging Moderates.
0:01:56 I’m Scott Galloway.
0:01:57 And I’m Jessica Jarlev.
0:01:59 Jessica, I am in New York.
0:02:01 I’m in your city.
0:02:03 I can see that, but I got no heads up.
0:02:03 You don’t want to hang.
0:02:04 No heads up.
0:02:05 IRL.
0:02:09 You know, you’re married with little kids.
0:02:13 You have absolutely no interest in hanging out with families.
0:02:14 None whatsoever.
0:02:17 Oh, I thought you were going to say you must be really busy,
0:02:20 but really you wanted to say I don’t want to see your little people.
0:02:23 So I didn’t tell you I was in New York.
0:02:26 Friends with kids, I pretend to be interested.
0:02:27 Not really.
0:02:28 Not really.
0:02:29 Not really.
0:02:30 Yeah.
0:02:34 Jess, we’re just three weeks out from Election Day.
0:02:36 And there’s been a flurry of new polling.
0:02:37 A New New York Times poll from over the weekend
0:02:39 shows hair up four in Pennsylvania
0:02:42 and Trump up six points in Arizona.
0:02:44 Last week, we got a Quinnipiac poll
0:02:46 that has Trump up three in Michigan, up two in Wisconsin.
0:02:49 And in Pennsylvania, Harris is up three.
0:02:51 Did you watch Meet the Press?
0:02:53 Or are you allowed to watch Meet the Press being on Fox?
0:02:54 Am I allowed?
0:02:54 No.
0:02:57 My TV doesn’t go to any other stations, but Fox.
0:02:57 Yeah.
0:03:00 The Stasi might turn you in.
0:03:03 But I saw that it was 40–
0:03:07 it used to be 49 or like 53, 45, and all of a sudden it’s tightened.
0:03:11 And the momentum that Harris had has flipped.
0:03:14 And now there’s momentum towards Trump.
0:03:15 Would you agree with that?
0:03:16 And what is your insight?
0:03:19 I think it’s a little more complicated than that.
0:03:22 But that was definitely the headline from the polls
0:03:23 that came out yesterday.
0:03:26 A lot of tweets with R plus, right?
0:03:28 The shift was going in one direction.
0:03:31 And it’s always choose your own adventure.
0:03:34 Like I could rattle off six or seven findings
0:03:37 that would help Harris’s case and all of this.
0:03:41 But it feels as if we’ve been talking about this as a tide
0:03:44 race for the last month, let’s say.
0:03:46 And now we’re really in it.
0:03:49 And David Pluff went on Pod Save America
0:03:52 and was talking about the campaign strategy and where we are.
0:03:55 And he said, do not pay attention to anything
0:03:57 that doesn’t have them within one point of each other
0:03:59 and Trump hitting 48.
0:04:01 Trump is going to hit 48.
0:04:04 The question is, what can we do?
0:04:07 And I thought that that was a really good bat signal
0:04:11 to throw up to all of the anxiety-prone Democrats, which
0:04:13 is basically all of us that were hyperventilating,
0:04:15 actually woke up to a text from a good friend of mine
0:04:17 who works in polling that said, now is the time
0:04:19 to start hyperventilating.
0:04:21 And he had been talking me off the cliff the night before.
0:04:24 But then these new surveys came in.
0:04:27 I should note that the CBS poll, which is also
0:04:29 a very high-quality poll, was good for her
0:04:33 and had her back, actually, to Biden’s levels
0:04:35 with black and Latino voters.
0:04:36 And I know we’re going to talk about that,
0:04:41 because that’s a real crux of her being able to win.
0:04:44 But I just look at, at this point, in 2020,
0:04:46 Biden was up nine or 10.
0:04:50 And if she’s up, the average is still like two to three points.
0:04:54 That doesn’t feel as good and as safe as it was.
0:04:56 And if you think about what we went through in order
0:05:01 to get a result in 2020, I have no idea when this election is
0:05:02 actually going to get called.
0:05:07 And that, again, for another bat signal or a spidey sense
0:05:09 or whatever kind of fear I could have of what
0:05:13 Trump will do in that interim while they are counting votes
0:05:14 is extremely scary to me.
0:05:17 -Yeah, there’s been some reports, including one in CNN,
0:05:19 basically saying that Democrats in the campaign
0:05:22 are a bit freaked out, that this momentum hit a wall
0:05:24 a couple weeks ago.
0:05:28 Have you talked to anyone in the Democratic apparatus
0:05:30 about what kind of their plan is, or for that matter,
0:05:31 in the Republican apparatus going
0:05:34 into the final stretches here?
0:05:39 -Yeah, so the Democratic plan is to flood the zone with events.
0:05:43 So Kamala’s campaigning schedule this week is massive.
0:05:45 She’s heading all of the blue wall states.
0:05:47 She’s doing a lot of rural campaigning.
0:05:49 They’re bringing in every surrogate that
0:05:50 could make a difference.
0:05:54 I loved seeing Bill Clinton out on the road in rural Georgia.
0:05:58 He’s not fully recreating his bus tour from 1992.
0:05:59 But Bubba’s still got it.
0:06:01 And there was this great anecdote.
0:06:04 And I like to think of it that there was some sort of Avengers
0:06:06 assemble meeting.
0:06:08 And they asked Bill Clinton, well, what do you want to do?
0:06:11 And he said, don’t send me anywhere really populated.
0:06:13 Send me out with the people.
0:06:15 Send me to rural Georgia.
0:06:20 And there’s really cute footage of him at a local fast food
0:06:20 place.
0:06:24 And when they realized in there who was standing in front of them,
0:06:26 how excited they were, the one woman actually thought
0:06:28 it was Joe Biden at first, which is just
0:06:30 an interesting old man comp.
0:06:33 So they’re going everywhere.
0:06:36 I hope doing much more press.
0:06:38 I know that we’re going to talk about that effect of this
0:06:39 as well.
0:06:44 But the big target has been, how do we address this problem
0:06:47 with black male voters in particular?
0:06:51 And they just put out their agenda for black men,
0:06:53 including providing a million loans that
0:06:56 are fully forgivable to black entrepreneurs,
0:06:59 championing education, training, and mentorship programs,
0:07:01 getting into crypto, other digital assets.
0:07:03 There’s a national health equity fund
0:07:07 focused on diseases like sickle cell, diabetes,
0:07:10 and mental health, legalizing recreational marijuana,
0:07:11 creating opportunities for black Americans
0:07:14 to succeed in this new industry.
0:07:16 And I think that that is–
0:07:18 it was coming, but a direct response
0:07:23 to a kind of controversy after Obama spoke on Thursday night.
0:07:29 And many felt like he was lecturing black men, or enforcing
0:07:30 them into.
0:07:31 I liked Obama’s speech.
0:07:32 Just to remind–
0:07:33 I did, too.
0:07:35 Just as somebody thinks about him in a lot,
0:07:38 just to remind 15 seconds though, when you say–
0:07:40 when you listed these programs that
0:07:42 are supposed to target or appeal to black people,
0:07:44 I felt like it was identity politics in the worst possible
0:07:45 way.
0:07:48 And that is, oh, black men care about crypto and marijuana.
0:07:52 It’s just like not an aspirational view of black men.
0:07:55 And I wonder if the Democrats have fallen into the same trap
0:07:56 a lot of times.
0:08:01 Don’t you think, though, that what she had been trying,
0:08:04 which was to just talk about an opportunity economy
0:08:06 for all Americans, and talk about home ownership,
0:08:09 talk about starting a small business,
0:08:14 talking about expanding health care,
0:08:18 cutting your taxes, raising taxes on those who can afford it,
0:08:20 that that was an agenda that should have appealed,
0:08:21 but it wasn’t resonating?
0:08:23 So I agree with you fundamentally,
0:08:27 but it seems like the black community is telling her,
0:08:29 we need something specific, because this other stuff
0:08:32 that you’re saying, we’re not hearing you.
0:08:35 Yeah, so look, at the end of the day, this is about winning.
0:08:38 And my sense is they’ve probably gone,
0:08:42 I think they’re smart people actually pretty high up
0:08:43 in both campaigns.
0:08:43 Susie Wiles.
0:08:47 Yeah, my sense is she’s been described as brilliant,
0:08:50 and very on message, and sometimes the gap,
0:08:53 or whenever the campaign kind of comes off the rails,
0:08:56 it’s blamed on his lack of discipline, not hers.
0:08:59 And the Democratic Party, I would
0:09:03 argue that I just think a huge mistake from the party
0:09:05 is rather than, I think they’re smart to talk
0:09:07 about the economy, opportunities for young people,
0:09:10 opportunities for first-time home buyers.
0:09:11 When they fall into identity politics,
0:09:13 I worry that when people hear this podcast
0:09:16 and say that the Democrats are trying to roll out giveaways,
0:09:21 basically a non-recourse loan, but you have to be black.
0:09:24 I worry, Jess, it’s going to turn off just as many struggling
0:09:29 young white men as turn on as many people in the black
0:09:30 community.
0:09:34 One of the things that has really hurt the Democratic Party
0:09:37 is just the level of identity politics.
0:09:39 And again, I just go back to this notion where
0:09:42 when you say on the DNC or website
0:09:46 that you’re advantaging 76% of the population, you’re not.
0:09:48 You’re just discriminating against 24%.
0:09:51 But if the polling shows they needed
0:09:53 to do something to motivate this community that
0:09:57 wasn’t as enraptured with Vice President Harris
0:09:59 as they were with Obama, I get it.
0:10:02 But I hear that and it just reeks of the same identity
0:10:04 politics that I think we’ve come to expect
0:10:06 from the Democratic Party that quite frankly turns off
0:10:09 a lot of rural voters and turns off a lot of white people.
0:10:13 So first part of my question, how would you
0:10:14 market these proposals?
0:10:16 So these aren’t going to go away.
0:10:19 Let’s say that it’s just not called an agenda for black America
0:10:21 or whatever it is.
0:10:24 How would you make this seem more universal
0:10:28 but signal to people who do want to know
0:10:30 that these programs are available to them?
0:10:33 Well, my go-to is I say programs that recognize
0:10:36 that the group that has fallen further faster
0:10:38 than any other group in America is young men.
0:10:40 And families all across America are feeling this.
0:10:44 Parents have two daughters, one son, one daughter at Penn,
0:10:47 one daughter in PR in Chicago, and their 26-year-old son
0:10:50 is living in the basement vaping and playing video games.
0:10:52 And that’s not even a joke.
0:10:56 That is a fairly consistent profile across a lot of homes.
0:10:59 Now, a lot of young men are killing it,
0:11:00 but most aren’t.
0:11:03 More single women own homes than single men.
0:11:05 Great, don’t do anything to get in the way
0:11:07 of women ascending.
0:11:09 Three to two college enrollment.
0:11:11 And a lot of the jobs that were available
0:11:15 or on ramps for these young men are no longer available.
0:11:16 So what I would do is a series of programs.
0:11:21 And by the way, all of these problems affecting young men
0:11:24 acutely affect young men of color.
0:11:27 Anything I’m talking about, whether it’s suicide,
0:11:30 addiction, homelessness, lack of economic opportunity,
0:11:33 lack of mating opportunities,
0:11:35 do you realize that marriage has become a luxury item?
0:11:38 So all of the problems I’m speaking to,
0:11:40 I believe if there were programs
0:11:43 would especially appeal to communities of color.
0:11:45 So what I would talk about is funding
0:11:49 for vocational programs, national service.
0:11:51 I can’t stand student loan debt forgiveness.
0:11:52 I think that turns off the two thirds of Americans
0:11:55 that didn’t have the chance to go to college,
0:11:58 red-shirting young men a year,
0:12:00 holding the all boys back a year
0:12:03 because they just mature later than girls.
0:12:07 Programs that put schools on the hook for student loan debt.
0:12:10 So they stopped putting people and denturing them
0:12:12 with that child tax credit.
0:12:15 Home loan programs, similar in Vice President Harris,
0:12:18 I like her plan for more pyramids.
0:12:20 I just wouldn’t make it about a loan for,
0:12:24 that’s a non-recourse loan for black entrepreneurs.
0:12:26 Well, what if I’m, I mean, how do you even qualify?
0:12:30 Like, the bottom line is I would target poor people,
0:12:33 not people based on the color of their skin.
0:12:34 Your thoughts?
0:12:38 – Yeah, well, I’ve been thinking a lot about
0:12:41 the great realignment that may be happening in this election
0:12:44 and how it’s not really about race, but it’s about class.
0:12:46 – 100%. – And that the Democrat, yeah.
0:12:47 – Sorry. – Great.
0:12:48 – 100%.
0:12:49 – Is the podcast over?
0:12:50 – Yeah, 100%. – Full agreement.
0:12:51 – 100%, and your kid’s gonna get
0:12:53 into any little pre-case she wants.
0:12:53 Go ahead.
0:12:55 – I mean, let’s hope.
0:12:59 But, you know, we, the Democrats are running the risk
0:13:03 of becoming just the middle class and up party,
0:13:07 especially with all of these new moderate Republicans
0:13:10 and right-leaning independents that are coming into the fold
0:13:12 as a result of the Trump era.
0:13:15 And I think that you’re seeing the impact of that
0:13:18 most explicitly on black voters
0:13:21 who have been the most loyal voting bloc.
0:13:24 And there was a great line on SNL this weekend
0:13:28 from Weekend Update, and they said,
0:13:30 if the Democrats always need 90% of the black vote
0:13:32 to win the presidential election,
0:13:35 they might have a flawed business model, right?
0:13:38 That this is, no one should ever have any expectations
0:13:41 that you’re gonna get 90% of anything
0:13:43 when you go to the ballot box.
0:13:47 And I don’t wanna be the party of just me.
0:13:49 Like, I love me, I think I’m great.
0:13:53 You know, I’m thankful that I got all of the education
0:13:56 that I did, and that I can live this tremendous life
0:14:00 that my parents set me up for and, you know,
0:14:04 that I’m in the top, or I found a guy in the top three quarters
0:14:05 and was able to get married
0:14:07 and have two beautiful children and all that jazz.
0:14:09 But I wanna be in the same party
0:14:12 with the least fortunate amongst us.
0:14:13 And that’s something that I feel is so core
0:14:16 to the Democratic ethos.
0:14:18 And if we are at risk of losing that,
0:14:21 I want to do everything possible
0:14:24 to make sure that voters understand
0:14:26 that we have a plan for them.
0:14:29 And that’s why I think that this agenda,
0:14:32 that is explicitly calling out that it is an agenda
0:14:33 for black people matters,
0:14:35 because Magic Johnson last week,
0:14:39 he was introducing Kamala in Flint in Michigan,
0:14:42 and he’s the co-chair of Athletes for Harris.
0:14:44 And he was talking about how much misinformation
0:14:46 there is about Kamala circulating.
0:14:48 Going back to when she was a prosecutor,
0:14:51 that she just locked up every young black guy
0:14:52 that was out there.
0:14:55 Charlemagne, the God is having a radio town hall with her.
0:14:58 He’s someone who was a supporter of hers
0:14:59 for the 2020 primary,
0:15:02 but has also talked about how he,
0:15:05 de facto was spreading misinformation about her,
0:15:06 because he didn’t know enough.
0:15:07 And he was also railing against her
0:15:10 for not getting things accomplished as a vice president,
0:15:11 when in reality,
0:15:13 what can you cite that a vice president did
0:15:15 besides Joe Biden and gay marriage,
0:15:18 which I think put him in the upper decks, right?
0:15:20 In terms of history of what you think of
0:15:22 as a good vice president.
0:15:25 And so when you’re up against that level
0:15:27 of a disinformation machine,
0:15:30 even coming from people that support the Democratic party,
0:15:32 I think you do have to make these specific appeals
0:15:34 and not making them in a pandering way,
0:15:36 saying like, this is who I am.
0:15:39 This is what the opportunity economy means.
0:15:41 These are the policies that I supported as vice president,
0:15:44 but going forward, I want you to know that I see you
0:15:45 and I hear you,
0:15:46 ’cause these focus groups
0:15:48 that have been going on all over the country,
0:15:50 black men are saying over and over again,
0:15:52 there is no deliverable for me.
0:15:57 – Yeah, look, what you say is compelling.
0:16:00 The thing I don’t think Democrats want to admit
0:16:04 is that her media tour started off very strong
0:16:05 and they said, get out there.
0:16:09 And I think she has performed poorly over the last week.
0:16:11 I think, and we’ll come back and talk about this,
0:16:13 but I think her appearance on the view,
0:16:16 some questions she should have been ready for, she wasn’t.
0:16:18 And the reality is as a candidate,
0:16:21 I think she’s just not that great on her feet.
0:16:24 And I think it’s hurt her the last week.
0:16:26 Anyways, we got some interesting data here,
0:16:28 campaigns and super PACs are spending the most
0:16:32 in Pennsylvania, Republicans spent 170 million,
0:16:34 Democrats spent 180,
0:16:36 basically they’re sort of neck and neck except in Michigan,
0:16:40 the Republicans are 88, Michigan’s at 120.
0:16:42 And then everywhere else,
0:16:44 the Democrats are kind of 10 to 20% up,
0:16:47 except for Nevada where it’s 22 versus 53,
0:16:50 reflecting that the Democrats have just outraised Republicans.
0:16:51 Any thoughts or any insights
0:16:53 when you see the spending by state?
0:16:55 – I mean, Pennsylvania is the key to it.
0:16:57 I mean, Trump has no path without it.
0:16:59 We have a very, very difficult path
0:17:04 and it’s a dead heat right now, makes total sense.
0:17:08 I’m just happy to know that we have these kinds of dollars
0:17:09 to be able to spend.
0:17:10 And last week we said there was an ad
0:17:12 that we were talking about that maybe it worked,
0:17:15 maybe it didn’t, but at least you have the money to try it.
0:17:16 Right, you can put, actually take all these ads
0:17:18 that are in the can and not even run them
0:17:20 if you decide that it’s not something
0:17:21 that fits with the message.
0:17:22 But the most important thing
0:17:24 that these dollars are gonna be spent on
0:17:26 is to get out the vote operation.
0:17:28 And that’s where I still am wondering
0:17:30 what’s going on on the Trump side of things
0:17:33 because all these articles like the LA Times
0:17:36 had a big piece about canvassing in Arizona
0:17:40 and people saying we haven’t had a door knocker
0:17:43 for the Trump campaign happening in Georgia,
0:17:45 happening in Pennsylvania.
0:17:47 And it just makes you wonder,
0:17:49 I get it, Charlie Kirk’s in charge,
0:17:52 maybe he has some master plan that I don’t understand,
0:17:54 but this is not conventional campaigning.
0:17:56 Maybe it works out,
0:18:00 but Suzy Wiles runs traditional campaigns usually
0:18:02 and I can’t understand this get out the vote component.
0:18:06 – All right, we’re gonna take a quick break,
0:18:09 stick with us to talk about Vice President Harris’
0:18:11 media blitz, we’ll be right back.
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0:21:10 – So Harris is continuing her media blitz this week,
0:21:12 hitting the Breakfast Club with Charlemagne
0:21:14 that got following appearances on Call Her Daddy,
0:21:17 60 Minutes of View, Howard Stern.
0:21:20 So, Charlemagne is coming on our show, correct, Jess?
0:21:22 – That’s the rumor.
0:21:23 – That’s the rumor.
0:21:24 – Yeah, in a couple weeks, right before the election.
0:21:26 – That’s super exciting.
0:21:29 Vice President Harris was on Howard Stern, Stephen Colbert.
0:21:32 Let’s listen to a clip of her on the Colbert show.
0:21:37 – You know, when you’ve lost millions of jobs,
0:21:43 you lost manufacturing, you lost automotive plants,
0:21:44 you lost the election.
0:21:46 – What does that make you?
0:21:47 – A losing.
0:21:51 This is what somebody at my rally said,
0:21:53 I thought it was funny, it’s just–
0:21:55 – It’s accurate, it’s accurate.
0:21:59 – This is what happens when I drink beer, barely.
0:22:00 – What did you think of her appearance?
0:22:05 – Well, I was disappointed by the week.
0:22:10 And I know that we were gonna come down
0:22:13 from the high of the DNC, and then we did,
0:22:15 and then we had the debate, and that created another high,
0:22:18 and there had to be some come down from that.
0:22:22 But I was really jazzed about the shows
0:22:25 that she was going on, and I thought that it would be
0:22:28 an amazing opportunity for her to showcase
0:22:30 not only her wonkiness, ’cause I think people do want
0:22:33 to see competency in that she understands,
0:22:34 you know, the nuts and bolts of everything,
0:22:39 but for her to come off as someone that was more relatable.
0:22:44 And I felt that she was too cautious and guarded,
0:22:46 and that might just be her personality.
0:22:50 You know, I don’t know her, it could be how she is.
0:22:52 But if she’s the fun aunt, you know,
0:22:55 that’s what Maya Rudolph says about her,
0:22:58 she portrays her at SNL.
0:23:00 I don’t think that that came across as clearly,
0:23:03 and there were just a few things
0:23:04 that I think if you’re in her position,
0:23:07 you have to have nailed perfectly.
0:23:11 And that question of what are you gonna do differently
0:23:15 from Joe Biden has to be sewn up perfectly.
0:23:18 And it was botched at first on the view,
0:23:20 then they went to commercial.
0:23:22 Obviously someone told her, you’re gonna have to do better.
0:23:25 So then she said, I’m gonna have a Republican in my cabinet.
0:23:27 That’s all well and good.
0:23:28 You know, the next question is,
0:23:30 is that Republican Liz Cheney,
0:23:32 that’s not really gonna appeal to people in the same way
0:23:36 as someone who feels that Trump is right
0:23:37 about one or two things.
0:23:41 It was a real shame that the best answer,
0:23:42 which came as a separate question
0:23:44 because they knew she was rolling out this policy,
0:23:46 didn’t come right away because the big announcement
0:23:50 for the day was that under a Harris-Walls administration,
0:23:54 Medicare would cover in-home care for aging parents,
0:23:57 which I think is just unbelievable.
0:24:00 Like what we would have done to be able to have that
0:24:03 when my dad was sick and we were able to afford
0:24:06 that home care for him, we’re very lucky.
0:24:08 But a majority of Americans can’t do that.
0:24:09 And that should have been the first answer.
0:24:12 Like I’m so proud of the fact that Joe and I
0:24:15 were able to expand Medicare, negotiating drug prices,
0:24:17 caping price of insulin, et cetera.
0:24:20 But you know what I’m going to do when I’m president?
0:24:21 Bam.
0:24:24 – Yeah, yeah, the in-home care hits
0:24:27 because I’m going through that with my father right now.
0:24:31 And there’s this program in California
0:24:34 that is really powerful and that is if you’re nurses,
0:24:37 I think they will help you set up a residence.
0:24:39 So we’ve taken them out of assisted living.
0:24:41 I mean, realistically, my father’s near the end
0:24:45 and he goes into a residence
0:24:47 and it’s a five or six bedroom residence in a nice area.
0:24:49 It’s not fat, but it’s very comfortable, it’s very nice.
0:24:50 And this husband and wife nursing team
0:24:52 manage the residence.
0:24:54 And I believe, I’m not sure,
0:24:56 but I think either Medicare or Medicaid
0:24:57 helps with the payment.
0:25:01 But the idea of figuring out a way
0:25:04 to let people be at home and cover some of the costs,
0:25:09 it just seems to me that that’s good for the cost,
0:25:11 good for the economy, good for families, good for the planet.
0:25:15 I think that’s a really powerful program.
0:25:17 I don’t even know the details of the program.
0:25:18 I can afford it.
0:25:21 It’s not going to really impact me, but that hits hard.
0:25:25 You just see what the sandwich generation is going through.
0:25:28 I mean, especially you with little kids,
0:25:31 all of my friends are struggling up and down.
0:25:34 Just all of a sudden, I have friends who’s,
0:25:38 recently close friends whose kids are having issues.
0:25:42 And then they’re also dealing with parents
0:25:45 who quite frankly, we’ve increased lifespan,
0:25:47 but not health span at the same rate.
0:25:51 So we’re all taking care of aging parents
0:25:55 who are living 10 and 20 years post decent health.
0:25:59 And I think that they’d be smart to really dial that up.
0:26:02 – Yeah, there’s no, I think more common wish
0:26:06 from a dying person to be able to pass away at home.
0:26:11 Like dying in a hospital and the people who were the nurses
0:26:13 and the physician’s assistants in particular
0:26:16 are deserve sainthood.
0:26:18 You know, my dad passed away in bed at home
0:26:20 with all of us in bed with him.
0:26:23 You just, there’s no amount of money
0:26:25 that you wouldn’t spend to be able to do that.
0:26:27 And I’m glad that the government
0:26:32 is gonna recognize that if Kamala becomes the next president.
0:26:34 – But when she, quite frankly, so let’s just acknowledge,
0:26:36 she’s gonna need to do better.
0:26:39 And when she’s on the view and they say,
0:26:41 is there anything that you disagreed with
0:26:42 or you would have done differently?
0:26:45 And she says, nothing comes to mind.
0:26:47 I mean, that’s gotta be,
0:26:49 well, let me tell you about what I would continue to do.
0:26:51 I would continue to support our allies
0:26:52 in Ukraine and Israel.
0:26:55 I would continue to ensure we’re gonna bring inflation
0:26:58 down to the lowest in the G7.
0:26:59 What I might do differently,
0:27:02 one, I would immediately partner with people across the island,
0:27:04 including Senator Langley,
0:27:06 who had an immigration bill that was bipartisan,
0:27:07 that should have been passed.
0:27:09 Had Trump not started saying he doesn’t wanna,
0:27:11 he wants to run on the problem, not fix it,
0:27:13 we are immediately going to fix
0:27:14 and address our immigration border.
0:27:17 We are going to have to start having a difficult
0:27:20 but adult conversation around the deficit.
0:27:23 And to say, is it gonna be more taxes
0:27:25 on corporations and the super wealthy?
0:27:26 Are we gonna have to get spending?
0:27:27 The answer is yes.
0:27:30 She just should have been locked and loaded.
0:27:32 – Like she was at the debate,
0:27:35 because we’ve seen her capable of,
0:27:37 frankly, a canned answer, well delivered.
0:27:40 – 100%, and instead she said,
0:27:41 well, nothing comes to mind.
0:27:43 It’s like, okay, so your campaign slogan is,
0:27:45 I’m Biden, but 20 years younger,
0:27:46 ’cause she was about to lose.
0:27:47 – Yeah, I’m like hot Biden, yeah.
0:27:50 – So that was disappointing.
0:27:52 And I don’t think Democrats want to acknowledge,
0:27:53 she had a really bad week,
0:27:56 because at the end of the day,
0:27:58 fairly or unfairly, she comes off,
0:27:59 is just not very good on her feet
0:28:03 and is prone to sort of these milk toasts,
0:28:06 answers that just feel somewhat awkward
0:28:09 and not, I don’t know what the opposite of inspiring is.
0:28:11 And he’s had a great week.
0:28:14 I feel as if you just got a, not even a week, weeks.
0:28:18 I think the last two weeks have definitely gone to Trump.
0:28:22 I think he has cauterized her momentum and reversed it.
0:28:25 And, you know, we’ll see what happens over the next week.
0:28:27 The one thing she does seem to have
0:28:29 is when I see these clips and granted you and I,
0:28:33 you know, we’re Democrats and we love kind of the greatest
0:28:35 hits in the hall of famers coming out, right?
0:28:38 So when you see Clinton, when you see Obama,
0:28:39 I loved what he said to young men.
0:28:41 He said, let me get this,
0:28:43 you think being a young man is about,
0:28:46 you know, not living up to your commitments?
0:28:47 He’s like, what’s with that?
0:28:49 And I liked that it was in a small room.
0:28:50 You know, I think he’s fantastic,
0:28:55 but the media I do think has a bias against Trump
0:28:59 and they’ve like really mocked Musk at that rally.
0:29:01 I thought that was great for Trump.
0:29:03 I’m not a fan of Elon Musk,
0:29:08 but a ton of young people and innovators and people in tech,
0:29:11 you know, this is their Jesus Christ, that guy.
0:29:13 And when he’s kind of all in on Trump
0:29:15 and creating a spectacle and jumping it down,
0:29:17 up and down on the stage,
0:29:19 you know, I know my co-host at Pivot
0:29:22 is gonna make fun of him because she doesn’t like him,
0:29:23 but it’s great for Trump.
0:29:26 It’s great that who’s the wealthiest man in the world,
0:29:28 who a lot of young men look up to,
0:29:32 is so excited about Trump that he’s on stage jumping for him.
0:29:33 You know, I just, I can’t help,
0:29:35 I think it’s really good for the Trump campaign.
0:29:39 And I don’t know if they have been more disciplined.
0:29:41 If this momentum continues in this direction,
0:29:44 he’s gonna be up by two or three in a week, your thoughts.
0:29:46 I don’t think the electorate is built
0:29:49 for him to go up two or three, just de facto,
0:29:51 but I take your point.
0:29:54 And the thing that Musk signals
0:29:57 that is important to the Trump campaign
0:30:02 is we are the movement or the campaign
0:30:05 of like the island of the misfit toys.
0:30:07 If you feel misunderstood,
0:30:09 if you feel like you’re not accepted,
0:30:11 if you’re a little different,
0:30:14 maybe you’re neurodivergent, maybe you aren’t.
0:30:16 But if you are struggling to get a job,
0:30:20 if no girls like you, we’re a place that you can go.
0:30:22 And not only that,
0:30:26 then I’m gonna spend this whole week firing rockets, right?
0:30:29 Like doing some of the coolest stuff
0:30:34 and rolling out all of these new amazing innovations.
0:30:37 And we don’t have that vibe.
0:30:42 Like part of being cool now, I think is being different, right?
0:30:44 There’s no mainstream to it.
0:30:46 It’s like the weirder you are, the better.
0:30:49 And I don’t feel like we’re running
0:30:52 a diverse enough campaign that way.
0:30:55 And Trump has managed to grab onto that.
0:30:56 And you see it in these interviews,
0:30:59 like he goes on Andrew Schultz’s podcast.
0:31:01 I thought it was a great forum for Trump.
0:31:03 He was making fun of him to his face.
0:31:04 Like Trump at one point says,
0:31:05 “I’m a mostly truthful person.”
0:31:08 And all of them burst out laughing in his face.
0:31:10 But it doesn’t matter because Trump isn’t bothered by it.
0:31:12 He’s not thrown, he just keeps going.
0:31:15 And actually one of the most important questions
0:31:17 of the campaign in which Trump dodged
0:31:18 but came from Andrew Schultz,
0:31:21 where he said, “I get it about immigration,
0:31:22 “we need the wall, et cetera.
0:31:24 “But what about the good people
0:31:27 “who have been here for decades?”
0:31:30 And he said, “I was raised by babysitters
0:31:31 “that are not here legally.”
0:31:33 He grew up here in New York City like I did.
0:31:38 And Trump just used it to go off on migrants.
0:31:41 But those kinds of interactions,
0:31:43 those kinds of questions being posed to him,
0:31:45 even if he doesn’t give a good answer,
0:31:49 is humanizing him in a way that is turning people on.
0:31:51 And what I do think the kind of secret factor
0:31:54 of the last week has been is actually JD Vance.
0:31:57 And I’m curious if you agree
0:32:02 that he won the debate and just you’re watching it
0:32:04 and you’re like, “This guy has got it.”
0:32:08 But it’s like the debate has had a long tail
0:32:12 and that the impact of JD Vance has been felt more strongly,
0:32:14 I think, in the last five to seven days
0:32:16 with the kind of interviews that he’s giving.
0:32:17 I mean, you should listen to him
0:32:19 if you haven’t on the daily.
0:32:21 He does a fantastic job.
0:32:22 And I mean, he’s bobbing and weaving.
0:32:25 He won’t say if Trump lost the election,
0:32:27 but he’s taking an issue like immigration.
0:32:29 And he did this with Martha Raditz as well
0:32:31 and got Martha rattled.
0:32:34 -Venezuelan gangs, the Republican mayor of the city
0:32:38 said flatly the city and state have not been taken over
0:32:40 or invaded or occupied by migrant gangs.
0:32:44 So do you support Donald Trump making those claims
0:32:48 that the Republican mayor says were grossly exaggerated
0:32:51 and have hurt the city’s identity and sense of safety?
0:32:52 I understand what you’re saying
0:32:54 that some people left behind,
0:32:56 but he’s making these statements
0:32:59 that the mayor is flat out disputing.
0:33:02 -Well, Martha, you just said the mayor said
0:33:05 they were exaggerated. -Grossly exaggerated.
0:33:06 -That means that there’s got to be some —
0:33:09 That means there’s got to be some element of truth here.
0:33:10 And, of course, President Trump
0:33:12 was actually in Aurora, Colorado,
0:33:14 talking to people on the ground.
0:33:15 And what we’re hearing, of course, Martha,
0:33:18 is that people are terrified by what has happened
0:33:20 with some of these Venezuelan gangs.
0:33:23 -You proliferated this lie about the cats and the dogs.
0:33:26 And he says, “You know what?
0:33:29 There are problems in these communities, right?
0:33:32 There are migrants that are using resources.
0:33:36 There are Haitians that are living four families to one house.
0:33:38 People are getting pushed out of their homes.”
0:33:41 With Martha Raditz, he did it about the Venezuelan gangs
0:33:43 that they said are taking over Aurora, Colorado.
0:33:44 And they have the Republican mayor saying,
0:33:45 “That’s absolutely not the case.”
0:33:48 And Martha Raditz says, “Well, there are a handful of them.”
0:33:51 And he said, “A handful is too many, Martha.”
0:33:53 And he said, “Do you hear yourself?”
0:33:56 And that was the soundbite that went everywhere
0:33:57 from the Sunday shows.
0:34:00 JD Vance saying, “Do you hear yourself?”
0:34:02 And as a liberal, I can’t tell you how many times
0:34:07 my conservative co-hosts, who I respect their opinion a lot,
0:34:10 will say to me, “Do you hear yourself?”
0:34:13 And I think that that has been a big part of the swing.
0:34:16 -It’s super interesting because I’ve always thought,
0:34:17 if you want to —
0:34:19 one of the things we do or traditionally have done
0:34:22 when I was running L2, which is essentially a —
0:34:23 we call it business intelligence,
0:34:26 but it was a consulting firm that just sat on a shit-dunned data
0:34:28 such that we didn’t have to hire attractive people
0:34:30 with Northern European accents.
0:34:32 We just called ourselves data people.
0:34:34 And I feel like an x-ray into someone’s IQ —
0:34:35 I can be fooled in an interview.
0:34:37 I think interviews are almost worthless.
0:34:40 If someone can write well, they’re intelligent.
0:34:41 Not only are they intelligent,
0:34:42 but they’re probably well-educated.
0:34:44 It’s like that quadrant of well-educated,
0:34:47 well-trained, and real IQ.
0:34:49 ‘Cause I know people who went to Ivy League schools.
0:34:51 When I started my first consulting firm, Prof,
0:34:55 when I was 26, my job was writing earnings calls
0:34:57 and writing speeches for CEOs.
0:34:59 ‘Cause these guys had gone to Harvard,
0:35:02 and they couldn’t write their way out of a fucking paper bag.
0:35:05 It is hard to fake the written word.
0:35:08 And when I read Hillbilly Elegy, I’m like,
0:35:11 “This guy is brilliant.”
0:35:16 The narrative arc, the way he brings situations to life,
0:35:20 his puncturing analogies, the way he structured his senses,
0:35:23 I just always thought, before he was in center,
0:35:25 this guy is brilliant.
0:35:26 And I do think he’s brilliant.
0:35:29 And I don’t think what people give him credit for is,
0:35:32 look at the hand he’s been dealt.
0:35:34 Everyone is gonna ask him,
0:35:37 “Did Trump lose the election?”
0:35:42 And I mean, how do you in any way come out okay
0:35:46 from basically denying democracy
0:35:48 and saying democracy isn’t important?
0:35:51 And yet he manages again to bob and weave.
0:35:53 And that New York Times reporter I thought did a great job
0:35:55 of just being very unemotional and saying,
0:35:57 “Senator Vance, I’m gonna ask you again.”
0:35:59 I thought she did a great job,
0:36:01 but he probably won the pod.
0:36:04 What’s interesting, I think, about this media tour,
0:36:09 the two most consequential media appearances
0:36:12 for Harris and Trump have been podcasts
0:36:15 with, I don’t wanna call it comedians,
0:36:17 the most consequential media appearance
0:36:20 for Harris was Alex Cooper’s “Call Her Daddy.”
0:36:22 And I believe the most consequential media appearance
0:36:26 of the last few weeks was Andrew Schultz’s podcast.
0:36:30 I thought he did a better job interviewing him
0:36:32 than anyone has.
0:36:32 – 100%.
0:36:34 – And by the way, he accused me of spreading
0:36:37 misinformation around Joe Rogan, so we hate him.
0:36:38 We hate him.
0:36:39 – Andrew, we do?
0:36:40 – Yeah, we hate him. – Okay, I didn’t know.
0:36:42 I hate him. – But this was a rare moment
0:36:45 of talent for him. – Rare W for the man we hate.
0:36:47 – Yeah, by the way, Joe Rogan was having people
0:36:50 on his podcast that said mRNA vaccines altered your DNA,
0:36:52 which is, that’s what you call misinformation,
0:36:55 but anyways, not that I’m bitter, not that I’m bitter.
0:36:56 – No, I don’t get that from you at all.
0:37:00 – Okay, so, but he was fantastic and…
0:37:03 – But that also, the fact that Vance can do
0:37:06 the dirty work or the heavy lifting allows Trump
0:37:10 to be able to coast through these more fun forums
0:37:12 and for the campaign to look like they’re doing
0:37:14 the hard stuff, but it’s not Trump himself.
0:37:17 He’s not in 60 minutes himself, right?
0:37:20 He’s doing this or he’s talking to a friendly TV host,
0:37:23 whereas it feels like everything is on Kamala,
0:37:26 even though Walls went on Fox News Sunday again,
0:37:28 and he did a really good job, but it feels like
0:37:30 she’s on an island alone and that the Trump side
0:37:32 is running as a team, which is interesting
0:37:33 because Trump was supposed to be the larger
0:37:37 than life person, but he needs JD Vance.
0:37:39 – Speaking of the podcast with Andrew Schultz,
0:37:40 let’s listen to a clip.
0:37:43 – Kamala, Kamala, it’s a little hard to say.
0:37:46 She’s Kamala because she’s obviously a communist.
0:37:49 She’s horrible, so I call her comrade.
0:37:53 And it’s not bad, but when you put the names together,
0:37:55 it’s a little, you gotta be able to pume.
0:37:57 (laughing)
0:37:59 – No, you gotta be able to put it out there.
0:38:01 – Pume, there you go.
0:38:03 – Gotta be able to pume.
0:38:07 – But his fan base loves it and he does come across
0:38:12 as very authentic and not starched and not rehearsed, but.
0:38:15 – And not scary.
0:38:18 – I think not scary matters ’cause these rallies,
0:38:21 that’s where all the bad stuff usually comes out,
0:38:24 where you hear him say, you know,
0:38:26 their migrants are like vermin,
0:38:28 like using 1930s type language.
0:38:30 He did it this weekend with Maria Bartiromo.
0:38:33 He said the enemy within is the real problem.
0:38:35 And then he goes on these podcasts,
0:38:38 which gets such bigger play.
0:38:40 And he seems like the fun grandpa,
0:38:42 like has he lost a step?
0:38:45 – Sure, his nicknames were way better in 2016.
0:38:47 But people are listening to that soundbite
0:38:49 or seeing him being self-effacing.
0:38:53 There was a great joke about repealing Roe v. Wade.
0:38:56 Andrew says to him, you know, Barron’s a stud,
0:38:59 are you nervous now that Roe v. Wade’s been repealed?
0:39:03 And Trump couldn’t land the plan on it.
0:39:05 But it was an interaction that makes him feel
0:39:09 so much more human than the rally boss.
0:39:12 I just don’t think there’s any getting around it.
0:39:13 The momentum is swung in my view.
0:39:15 Political recently reported on Trump’s push
0:39:18 to win over the bro vote with the Nelk Boys,
0:39:20 the host of the FullSend podcast
0:39:21 and the once funding a voter registration drive
0:39:23 called Send the Vote.
0:39:25 They’re targeting young male voters through ads,
0:39:29 the Haktua podcast, girl podcast, dating apps,
0:39:32 music festivals and even college football games.
0:39:35 It’s just, so we’re gonna pat ourselves on the back.
0:39:38 We said this a couple of months ago
0:39:42 on CNN and other places that we thought this election
0:39:44 was gonna be a referendum on women’s rights,
0:39:47 but my sense is those folks are kind of already decided.
0:39:49 If you’re pro-life, you’re going Trump.
0:39:53 If you are very passionate about bodily autonomy,
0:39:55 I think Harris has you sewn up,
0:39:58 but it’s clear both campaigns are now
0:40:00 going after quote unquote the bro vote.
0:40:02 And the thing that Harris is trying to do,
0:40:04 I think it’s just make sure that not so much
0:40:06 that they vote for Trump, but they just,
0:40:08 that they don’t vote, which is kind of a vote for Trump.
0:40:12 They’re trying to use some surrogates to motivate them.
0:40:13 Trump’s also officially turned down
0:40:15 the invitations for more debates.
0:40:16 That’s a bummer.
0:40:19 I’m shocked that Harris agreed to a debate.
0:40:21 Actually, it would be a great idea.
0:40:24 I’m easy for me to say the five should moderate.
0:40:27 I wonder if I guess Trump’s just not interested.
0:40:29 I guess, has Fox tried to get them to do it?
0:40:32 – Yeah, with Bret Bear and Martha McCallum,
0:40:35 there are election anchors and Trump won’t do it.
0:40:36 He won’t play ball.
0:40:39 I think he, well, he probably thinks
0:40:41 he could do a really good job,
0:40:45 but Susie Wiles or smarter people are telling him,
0:40:48 you know, we’re going in a good direction right now.
0:40:52 Don’t give her another chance to recapture the momentum.
0:40:53 We don’t need it.
0:40:57 I don’t know if that’s correct or not, but safer.
0:41:00 – Anyways, Bob Woodward’s new book War comes out this week.
0:41:01 It’s filled with fresh details
0:41:03 about Trump’s relationship with Putin,
0:41:05 including secret COVID-19 testing supplies
0:41:07 Trump sent to Russia.
0:41:09 By the way, I don’t see a problem with that.
0:41:10 – You don’t?
0:41:11 – Well, he didn’t send that many, did he?
0:41:13 – Then you are the problem, Scott Galloway.
0:41:15 – But did he send that many?
0:41:16 I mean, wasn’t it like trying to just get along
0:41:17 with the world later? – It wasn’t just one.
0:41:21 And the problem is that doctors working in ERs
0:41:24 and first responders couldn’t get COVID tests.
0:41:25 And he’s sending them to– – I can feel it.
0:41:27 I’m about to be shamed.
0:41:28 – I’m sorry.
0:41:31 – Caroline, do not cut this out, Scott.
0:41:32 – No, we’ll give this to you.
0:41:34 Americans could not get tests.
0:41:36 And he sent it to our biggest adversary.
0:41:37 – But how many?
0:41:39 I’m asking to learn not to make a point.
0:41:42 How many did he actually send?
0:41:43 – I don’t know.
0:41:44 – I mean, it was like– – It was not just one.
0:41:46 – Right, but was it like a box saying here,
0:41:48 for you and your friends, let’s get along
0:41:49 and not go to war? – Forever.
0:41:53 Can you imagine if Biden had done something like this?
0:41:55 – Fair point. – Or if Kamala,
0:41:58 you know, had a, even a separate text message change.
0:41:59 – 100%.
0:42:00 – With these people.
0:42:02 And remember, Jared Kushner and the WhatsApp chats
0:42:04 with the Saudis and making $2 billion,
0:42:06 these things would never fly
0:42:07 in a democratic administration.
0:42:10 – 100%, no, you’re absolutely right.
0:42:11 – Oh, thank you. – You’re right.
0:42:12 Listen to yourself.
0:42:15 – I would like to know how many tests there were
0:42:16 now that you’ve raised it.
0:42:17 ‘Cause I’ve been pretty pissed off about it
0:42:19 without knowing exactly how many.
0:42:22 – Okay, we’ll be right back after a break
0:42:24 to discuss Trump’s lies about hurricane recovery efforts.
0:42:25 Stay with us.
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0:43:41 ♪ This will be the day ♪
0:43:49 – So, Jeff, last week as thousands were grappling
0:43:52 with the aftermath of Hurricane Helene and Hurricane Milton,
0:43:54 Trump spread misinformation about FEMA’s response.
0:43:56 He claimed that the federal government isn’t assisting
0:43:59 those affected by Hurricane Helene
0:44:01 because Biden and Harris have allocated all the funds
0:44:02 to undocumented immigrants.
0:44:04 So let’s listen to a clip.
0:44:06 – People are dying in North Carolina.
0:44:08 They’re dying all over.
0:44:10 There’s five, six states.
0:44:12 They’re dying and they’re getting no help
0:44:15 from our federal government because they have no money,
0:44:17 because their money’s been spent
0:44:20 on people that should not be in our country.
0:44:21 – Huh.
0:44:23 The White House worked to debunk these claims,
0:44:25 but we know how quickly this information
0:44:27 could spread in today’s environment.
0:44:28 What do you think are the impacts
0:44:31 of Trump amplifying this misinformation?
0:44:34 Jess, do you think it hurts or helps him?
0:44:37 – Well, I guess it helps him that they’ve poll tested this
0:44:39 and his supporters believe it.
0:44:40 You know, if you’re not breaking through
0:44:42 to people who are actually supporting him,
0:44:44 then it doesn’t make any difference.
0:44:46 The other layer of it is the real effects of this,
0:44:49 which is that people who need aid
0:44:51 aren’t thinking that it’s not coming.
0:44:54 They’re thinking that they’re not entitled to it.
0:44:56 They’re thinking they’re only getting $750,
0:44:58 which is the initial amount that FEMA gives you
0:45:01 for your basic necessities or essentials,
0:45:04 and then you can apply for a lot more money.
0:45:05 And it also leads to stuff.
0:45:07 I don’t know if you saw this story.
0:45:08 So Rutherford, North Carolina,
0:45:12 one of the hardest hit areas, FEMA’s down there working,
0:45:13 and they had to be pulled out
0:45:18 because armed militias were showing up to, quote, get FEMA.
0:45:21 So that is the result of all of this.
0:45:22 That level of disinformation.
0:45:25 So these FEMA workers actually had to leave their job,
0:45:26 their rescue jobs,
0:45:31 because these lunatics with weapons showed up
0:45:32 to be hunting FEMA.
0:45:36 And I don’t wanna be a broken record,
0:45:38 but I do a little bit about this point,
0:45:42 that all of it just indicates that the number one priority
0:45:45 is to get the American public to distrust the government.
0:45:48 And as an extension, I think then to be able to say,
0:45:50 I won the election.
0:45:51 How can you trust them about anything?
0:45:55 They’re not coming to save you when a hurricane happens,
0:45:57 and they’re not counting the votes properly.
0:46:01 – Look, this is very disappointing and it’s hard to have to,
0:46:04 I don’t think there’s a both side of them here.
0:46:07 Our institutions are meant to be the connective tissue here.
0:46:10 When people were cowering in the raptors,
0:46:11 January 6th our elected representatives,
0:46:12 Republican and Democrat,
0:46:14 that was us cowering in the raptors.
0:46:17 When people are, the reason we pay taxes
0:46:20 is to fund a FEMA such that when people are
0:46:21 in the wrong place at the right time
0:46:24 and devastated by a natural disaster,
0:46:25 that we come together.
0:46:30 This used to be one place where Jerry Brown
0:46:32 and Governor Newsom or Governor Brown
0:46:33 and Lieutenant Governor Newsom walked around
0:46:37 with President Trump and the super fires in California
0:46:38 to our devastated areas.
0:46:41 This used to be a place where we come together.
0:46:45 And my understanding is, Governor DeSantis,
0:46:47 they’re not even returning their calls,
0:46:51 that they wanted to be perceived as a total disaster.
0:46:54 And the problem is that a lot of people believe this
0:46:57 and aren’t calling FEMA and aren’t accessing the resources
0:46:59 that they’re entitled to and that would help.
0:47:01 This is, they’re just not getting around.
0:47:02 It’s incredibly disappointing.
0:47:06 It speaks to a large issue that Americans no longer trust
0:47:10 their institutions and our institutions are us.
0:47:12 So it’s a larger issue.
0:47:13 I don’t know how to solve it.
0:47:16 I think that probably the one thing we would need to do
0:47:18 to try and address it is to get young people
0:47:20 into mandatory national service
0:47:23 so that they could see that we’re still work to done,
0:47:26 but this is the least bad country or the best country
0:47:28 in the history of the planet.
0:47:30 But there’s just generally speaking,
0:47:34 a total mistrust of institutions.
0:47:35 I put out a thread.
0:47:39 I saw the nicest video of this young man, this doctor,
0:47:43 walking into a room with a preemie that wasn’t moving
0:47:44 and wasn’t breathing.
0:47:47 And he just very adroitly and crisply got this.
0:47:48 – Oh, I saw that.
0:47:52 – Got this mini ventilator started tickling the kid
0:47:54 or bothering it to try and inspire.
0:47:56 And then you hear literally the most beautiful sound
0:47:56 in the world.
0:48:00 You hear this kid start to wail or this baby.
0:48:03 And I put out, we need experts.
0:48:05 And I was just shocked how many comments were,
0:48:07 and I don’t know if this is bots.
0:48:08 I don’t know who it is saying,
0:48:11 experts are late stage capitalism.
0:48:13 It’s saying, okay, we can’t even have experts now.
0:48:15 We can’t even like salute people
0:48:17 who are just really fucking good at what they do
0:48:20 that make all of our lives better and even save lives.
0:48:23 And there’s just such a weird distrust.
0:48:25 And I don’t know, I don’t know where it stems from.
0:48:27 I don’t even know how much of it is real.
0:48:31 And that’s what the Soviet propaganda machine used to say.
0:48:33 It’s not about misinformation.
0:48:35 It’s about flooding the zone and overloading.
0:48:39 So nobody knows what to think sets that we’re all,
0:48:41 we’re all just, you know, totally, totally overwhelmed.
0:48:44 But this is especially disappointing.
0:48:47 It also distracts from any intelligent conversation
0:48:49 around the fact that these hurricanes
0:48:52 are going into areas that are not weather ready.
0:48:53 Because, I mean, you’re in Florida,
0:48:54 when you’re building a house,
0:48:57 you get double paying hurricane impact windows.
0:48:58 You think about buying a generator
0:49:01 in case your power goes out.
0:49:02 In Asheville, North Carolina,
0:49:03 they didn’t think they’d ever need
0:49:04 to be worried about our current.
0:49:06 I read on, here where I read,
0:49:09 that there’s like a non-zero probability
0:49:12 that London might experience its first hurricane.
0:49:14 But instead, we’re having these conversations
0:49:15 around misinformation instead of saying,
0:49:18 “Okay, what does this mean about climate change?”
0:49:22 Or whether, you know, preparation in terms of a disaster
0:49:24 or what FEMA funding should in fact be.
0:49:27 And instead, it’s just this total misdirect around
0:49:28 all of this bullshit.
0:49:32 But I was, this stuff is incredibly disappointing.
0:49:34 I think the hurricane has actually helped Trump
0:49:38 because I think the feeling of chaos
0:49:41 just lends itself well to the challenger.
0:49:44 That the more chaos and disruption you feel,
0:49:46 you’re gonna blame the current administration
0:49:48 fairly or unfairly.
0:49:50 And while I think the response from FEMA
0:49:53 has been people doing their level best,
0:49:57 I think this sense of chaos actually helps Trump.
0:49:58 Your thoughts?
0:49:59 – Yeah, I think so too.
0:50:00 And I just wanted to note,
0:50:03 DeSantis actually works very well with President Biden.
0:50:07 His politics playing was he wouldn’t take Kamala’s call.
0:50:09 And basically said, like I never hear from her
0:50:11 during other storms, like this is about the campaign,
0:50:13 I can have that.
0:50:18 But I agree chaos benefits the chaos agent in all of this.
0:50:23 And it does seem like FEMA and the administration
0:50:25 was better prepared for Florida
0:50:27 than they were for North Carolina,
0:50:30 even though the disaster declarations were signed early.
0:50:35 But North Carolina had to depend on private actors
0:50:38 more than they should have in the first couple of days
0:50:40 in terms of the recovery.
0:50:42 Should note that there are a lot of Republican officials
0:50:46 on record saying, do not believe all of these lies,
0:50:48 not necessarily calling Trump out specifically,
0:50:50 but saying like these are the facts,
0:50:52 make sure you know what resources are available to you,
0:50:55 where you can go, et cetera.
0:50:57 In an election where you have,
0:50:59 what does she like, half an incumbent,
0:51:02 if it’s like a center of incumbency,
0:51:06 it’s gonna fall on her, right?
0:51:08 Anything that goes wrong with a response like this,
0:51:10 even though the vice president again, can’t do anything,
0:51:12 she’s not even in the chain of command
0:51:14 for something like this.
0:51:16 She’s going to end up with the responsibility.
0:51:18 And the fact that he took this
0:51:20 and made it an immigration issue,
0:51:22 which he thinks is, you know,
0:51:24 his gold standard issue at this point.
0:51:26 And I would say, you probably should be hewing more
0:51:27 towards the economy than immigration
0:51:30 ’cause economy is always going to be number one.
0:51:33 But by telling this lie about the pots of money
0:51:36 being co-mingled when we know that migrant money
0:51:37 comes from shelter services,
0:51:40 and this is the disaster relief fund,
0:51:43 people get the wrong idea and they don’t even know,
0:51:44 Donald Trump is the only one actually
0:51:49 that took disaster relief money out of the pot in 2019
0:51:51 and moved it over to address something else
0:51:52 having to do with migrants.
0:51:55 And he’s the one that had to be shown.
0:51:56 Did you see this story?
0:52:00 That they had to show him voter data from Orange County
0:52:02 when the wildfires were happening,
0:52:04 so that he knew that he would be helping out
0:52:07 some Republicans because otherwise he wanted to withhold.
0:52:08 – Yeah, it wasn’t gonna do it.
0:52:09 Yeah, yeah.
0:52:10 – He sourced.
0:52:11 – There you go.
0:52:12 – President Trump.
0:52:13 – As we wrap up here, Jess,
0:52:15 is there anything or is there any like next big thing
0:52:17 you’re looking for in the next week?
0:52:20 Any pivotal moments where we’ll have our eyes on?
0:52:24 – You know, just how Kamala does this week,
0:52:26 how she’s going to be going back to rally form.
0:52:29 And I do feel bad for her that there was this,
0:52:31 oh my God, you got to do more interviews
0:52:32 and she does a bunch of interviews
0:52:33 and they’re like, why aren’t you doing the rallies?
0:52:36 So she’s doing all these rallies this week,
0:52:37 but I’ll be paying really close attention
0:52:42 to Charlemagne’s town hall and how she does there,
0:52:47 where she’s going, how she’s being received
0:52:50 and also the message that all of these surrogates
0:52:51 are delivering.
0:52:53 But I don’t think that there’s like one crescendo moment
0:52:54 I’m focused on.
0:52:55 What about you?
0:52:56 – Well, I think you miss what will obviously be
0:52:58 the biggest media event of the political season
0:52:59 is coming up.
0:53:00 Do you know what that is?
0:53:01 – It’s Monday, yeah.
0:53:02 – That’s right.
0:53:03 – But Kamala’s not coming.
0:53:04 – Raging Moderates live in New York,
0:53:06 our live launch event.
0:53:07 – I’m going to bring my baby.
0:53:10 – I’m sorry, no, no, no, kids not allowed.
0:53:12 I de-checked a door.
0:53:14 Live podcast, that’s right.
0:53:17 Monday, we’re just here, we’re sold out.
0:53:17 We have.
0:53:18 – I did hear that.
0:53:21 – We have dozens and dozens of fans just already.
0:53:22 – I can’t believe it.
0:53:23 – This is very, very exciting.
0:53:26 All right, that’s all for this episode.
0:53:27 Thank you for listening to Raging Moderates.
0:53:30 Our producers are Caroline Chagrin and David Toledo.
0:53:32 Our technical director is Drew Burroughs.
0:53:34 You can find Raging Moderates on the Prodigy pod
0:53:37 every Tuesday and on YouTube every Wednesday.
0:53:39 Just have a great rest of the week.
0:53:40 – You too.
0:53:41 See you around.
0:53:44 (upbeat music)

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0:01:20 ConstantContact.ca.
0:01:24 – Explaining football to the friend
0:01:26 who’s just there for the nachos, hard.
0:01:29 Tailgating from home like a pro with snacks and drinks
0:01:31 everyone will love, an easy win.
0:01:33 And with Instacart helping deliver
0:01:35 the snack time MVPs to your door,
0:01:38 you’re ready for the game in as fast as 30 minutes.
0:01:39 So you never have to miss a play
0:01:41 or lose your seat on the couch
0:01:44 or have to go head to head for the last chicken wing.
0:01:46 Shop Game Day faves on Instacart
0:01:50 and enjoy $0 delivery fees on your first three grocery orders.
0:01:51 Offer valid for a limited time.
0:01:53 Other fees and terms apply.
0:01:55 – Today’s number, $1,100.
0:01:58 That’s the cost of a platinum bar on Costco’s website.
0:02:01 Ed Shustui, I saw my doctor yesterday
0:02:04 and showed him my asshole which had blood coming out of it.
0:02:08 And he just kept pushing his cart down the Costco aisle.
0:02:10 – Cleanup aisle two.
0:02:12 (upbeat music)
0:02:20 – Welcome to ProfGMark.
0:02:22 It said that kind of humor.
0:02:23 As you get older, you’ll get it.
0:02:24 – You made that one up, surely.
0:02:25 – I made that one up.
0:02:26 No, no, no.
0:02:27 I found that one online.
0:02:29 – You got that one.
0:02:30 – You think I’m a sick fuck.
0:02:34 Anyways, welcome to ProfGMarkets.
0:02:37 Today we’re discussing Hindenburg short report on Roblox
0:02:40 and Germany’s shrinking economy.
0:02:42 Farfinn again.
0:02:43 Now it’s just Farfinn.
0:02:46 But here with the news is ProfG.
0:02:49 Ed, well, it says banter.
0:02:50 All right, Ed, what?
0:02:52 Hey, Ed, what are you doing?
0:02:55 Hey, Ed, what’s going on, young person?
0:03:00 Have you seen anything good on that TikTok?
0:03:03 – Actually, I did.
0:03:06 I did wanna bring up something I saw on TikTok.
0:03:09 Have you seen Trump’s interview with Andrew Schultz,
0:03:11 the comedian that just came out recently?
0:03:12 – I haven’t.
0:03:16 – There’s this amazing clip that reminded me of you.
0:03:20 He’s talking about how a lot of people criticize him
0:03:23 for rambling and he says that actually I don’t ramble.
0:03:26 Actually, it’s a new word that I’ve created.
0:03:28 It’s called weaving.
0:03:30 I weave in and out of topics in a way
0:03:32 that only a genius can do.
0:03:34 I feel like you might relate to that, no?
0:03:35 – I like non sequiturs.
0:03:36 I think people like them.
0:03:39 I think the majority of the news that we talk about,
0:03:40 everyone’s already heard before.
0:03:42 They want some weaving and bobbing.
0:03:46 Although, yeah, is it the weave?
0:03:47 I don’t know if we weave.
0:03:49 Anyways, I think we’re looking for excuses
0:03:52 to talk about anything but the actual news.
0:03:54 – I do wanna hear about LA though,
0:03:56 ’cause your time’s coming to an end.
0:03:58 I need to hear if you’ve hung out with any famous people.
0:04:00 If you’ve done any drugs,
0:04:01 if you’ve gone to any nice restaurants,
0:04:02 let’s just get the final roundup
0:04:04 before you return to the East.
0:04:05 – Well, you know me.
0:04:08 I did have dinner last night
0:04:09 with a very talented celebrity,
0:04:13 but I like to keep my personal relationships
0:04:15 and friendships private.
0:04:17 I just don’t like to name drop,
0:04:19 so I can’t go into it.
0:04:23 – Will Arnett, I had dinner with Will Arnett.
0:04:23 – There we go.
0:04:25 That’s awesome, how is it?
0:04:26 – He’s kind of how you would imagine.
0:04:29 He’s, well, when he’s funny, he’s very thoughtful.
0:04:31 – More successful than our podcast for one.
0:04:34 – Yeah, like one of the three most successful podcasts
0:04:37 in the world, “Smartness.”
0:04:39 And the thing that really struck me,
0:04:42 of course, I’m very eluxist, is he’s very handsome.
0:04:43 – Did he share any secrets
0:04:45 on how to get a $100 million deal?
0:04:48 – Yeah, I gave, have your co-host be Jason Bateman
0:04:53 and Sean Hayes, so I took copious notes on that.
0:04:54 Have you spent much time in LA?
0:04:55 – I lived there for a month a couple of years ago.
0:04:56 – Why was that?
0:04:58 I forget, you just right out of school?
0:05:01 – No, no, no, it was, while I was working for you,
0:05:05 I just got an Airbnb with three of my buddies
0:05:06 and we just lived there.
0:05:11 It was all right, but I think you wanna get really rich first.
0:05:14 I think that’s the vibe, that’s the move in LA.
0:05:16 – Yeah, I think that’s the vibe in any city,
0:05:20 but especially though in LA, I actually remember this
0:05:22 and I’m now virtually saying, what a great boss I am.
0:05:25 For some reason, I had a shit ton of alcohol in my room.
0:05:26 – Yeah, that’s right.
0:05:29 You sent me a bunch of alcohol and we drank all of it.
0:05:32 It was great and we had a toast in your honor.
0:05:34 – That’s what you call employee benefits
0:05:35 here at PropG Media.
0:05:36 – Exactly.
0:05:39 – Yeah, my boss is a raging alcoholic
0:05:41 and buys too much alcohol.
0:05:42 – And I appreciate it.
0:05:45 – And with that, let’s move on to what we’re here to do,
0:05:46 which is talk about the markets.
0:05:48 Let’s start with our weekly review of market vitals.
0:05:51 (upbeat music)
0:05:57 The S&P 500 climbed, the dollar rose,
0:06:00 Bitcoin fell and the yield on tenure treasuries increased.
0:06:02 Shifting to the headlines.
0:06:04 Boeing withdrew a contract offer
0:06:07 after negotiations with the machinists union broke down.
0:06:10 The offer would have given workers a 30% raise over four years
0:06:13 and the strike, which is nearing its one month mark,
0:06:17 will cost Boeing an estimated $1 billion per month.
0:06:19 Amazon announced an AI tool for deliveries
0:06:22 that will shorten routes by roughly 30 minutes.
0:06:26 The tool, which will be rolled out to 1,000 vans next year,
0:06:28 will help drivers more efficiently identify
0:06:31 which packages need to be delivered at each stop.
0:06:33 The Justice Department is considering
0:06:35 recommending a breakup of Google
0:06:37 as one of the potential remedies for its antitrust case.
0:06:40 However, judge Amit Mehta will not make a decision
0:06:42 on the final remedy until next summer.
0:06:45 Google stock fell nearly 2% on that news.
0:06:49 And finally, Cerebrous Systems may postpone its IPO
0:06:51 due to a national security review
0:06:53 of G42’s investment in the company.
0:06:56 As we discussed last week, UAE based G42
0:07:00 is both an investor in Cerebrous and its largest customer.
0:07:03 Scott, your thoughts starting with the breakdown
0:07:07 of this negotiation between the machinists union and Boeing.
0:07:09 – Generally speaking, I think there needs to be
0:07:12 a construct for transferring wealth back
0:07:15 from kind of the owners to the earners.
0:07:19 And you have this kind of out of control income inequality
0:07:23 where the entire company, the organization of a business
0:07:26 is shaped around the notion of how do we get the value
0:07:29 of the shares up, which does benefit the economy
0:07:31 on some levels, but massively benefits the people
0:07:33 who get the majority of their compensation
0:07:36 from options on shares, which is senior management.
0:07:38 And the way you totally optimize for shareholders,
0:07:41 by frankly, is that every turn you try and keep wages
0:07:43 as low as possible.
0:07:45 The objective is to underpay people,
0:07:49 such that you can transfer money to shareholders,
0:07:52 increase the share price, and then the top 20, 30 people
0:07:55 in the company get their golf stream
0:07:57 or their Boeing business jet.
0:07:59 The strike here is really, it’s a function
0:08:02 of how well the industry is doing,
0:08:06 and also the leverage point.
0:08:08 At what point in the cycle are they striking?
0:08:11 And in this instance, it’s somewhere in between
0:08:13 in terms of their leverage and their timing,
0:08:15 it’s somewhere in between where the riders were
0:08:17 with no leverage in a shrinking industry
0:08:21 and where the longshoremen were with a ton of leverage
0:08:24 in an incredibly sensitive time.
0:08:27 Boeing’s offered a 30% pay increase.
0:08:30 The union is asking for a 40% increase over four years.
0:08:32 I just think they’re pretty close.
0:08:33 They’re gonna figure this out.
0:08:36 The average Boeing machinist makes $75,000 a year.
0:08:39 So it’s not like this is a pretty highly skilled job.
0:08:40 And the thing, the data that struck me,
0:08:43 that me, pulled together is that their wages are really,
0:08:46 have only increased 8% over the last 10 years.
0:08:48 And in that same period, consumer prices are up 40%.
0:08:52 So the purchasing power and prosperity of Boeing workers
0:08:54 has gone down the last 10 years.
0:08:58 And the problem is that Boeing has, what’s the term?
0:09:01 They’ve shit the bed the last few years.
0:09:02 So they don’t have a ton of leverage.
0:09:06 It’s still a good company, it’s still a profitable company.
0:09:07 They’re gonna figure this out, this gets done.
0:09:08 What are your thoughts?
0:09:11 – So this has been building up for a while.
0:09:13 And actually a few years ago,
0:09:17 the union told their members that they should start saving up
0:09:21 because they should expect a pretty significant strike
0:09:24 in the next few years, which I think is really responsible.
0:09:28 And it just shows that this is actually quite warranted.
0:09:30 The idea that they have said,
0:09:35 this is a very coordinated move is a coordinated attack.
0:09:38 And we need to stockpile for several years.
0:09:40 And so here they are in 2024,
0:09:43 Boeing is in an extremely tenuous position itself.
0:09:45 The stock has crashed,
0:09:48 their credit rating is on the verge of being downgraded to junk.
0:09:52 They have $60 billion of debt on the balance sheet.
0:09:53 And as we have discussed before,
0:09:58 their doors are also flying off of their aircraft mid-flight.
0:10:00 So it is a very strange dynamic
0:10:03 where neither party has much leverage at all.
0:10:06 They’re both sort of being kicked in the balls,
0:10:10 Boeing by the stock market and Boeing’s workers by Boeing.
0:10:12 And so when I look at this,
0:10:16 I am sort of struggling myself to assess
0:10:19 where this is going to land in terms of a negotiation.
0:10:23 I am a little surprised that Boeing didn’t agree
0:10:26 or were not down to meet their demands of 40%.
0:10:28 They were down to say 30%,
0:10:32 but perhaps it just speaks to how bad of a position Boeing
0:10:32 is in right now.
0:10:35 The fact that they cannot make those demands.
0:10:37 So this is a confusing one for me.
0:10:41 And I’m not sure I have a perfect handle
0:10:42 on where this is gonna land.
0:10:43 – Well, unfortunately for him,
0:10:45 the Boeing CEO said in the last earnings call,
0:10:48 when talking about some of the challenges they face,
0:10:48 he said, well, you know,
0:10:51 and God closes a window, he opens a door.
0:10:55 And that was just the wrong thing to say
0:10:56 in an earnings call on Boeing.
0:10:58 Let’s get to the next story.
0:11:02 – Okay, let’s talk about how Amazon is using AI
0:11:05 to transform delivery routes.
0:11:07 Do you have any thoughts on that story?
0:11:09 – It’s the boring shit that moves shareholder value.
0:11:11 The fun stuff that people want to talk about,
0:11:13 social and everything.
0:11:17 You know, when I was running L2 or I was a consultant,
0:11:18 they want to talk about innovation
0:11:20 and big splashy ideas and Instagram.
0:11:24 And, you know, they want the fun stuff.
0:11:26 The stuff that moves shareholder value is really boring shit,
0:11:29 like reducing a red envelope.
0:11:31 The best thing we could have done for shareholder value,
0:11:32 and we try to get focused on it was,
0:11:34 how do we reduce returns?
0:11:36 You know, how do we cut,
0:11:38 how do we cut load times on the pages?
0:11:40 ‘Cause if you’re load times longer than a third of a second,
0:11:42 20% of the people bounce.
0:11:43 There’s just,
0:11:45 it’s the boring shit that moves shareholder value.
0:11:48 And with AI, we’re talking about, you know,
0:11:50 the fun stuff and the kind of dramatic cool things it can do.
0:11:53 But where AI really impacts the economy
0:11:55 is around productivity and efficiency.
0:11:58 And what they’re saying with AI is that they can
0:12:00 shorten the typical delivery route by 30 minutes.
0:12:03 Given that Amazon has 390,000 delivery workers
0:12:08 who earn about $19.40 per hour to deliver seven days per week,
0:12:11 this reduction would save Amazon
0:12:13 approximately $1.4 billion a year.
0:12:15 And then if you assign the multiple,
0:12:17 you know, this one innovation around AI
0:12:20 potentially could increase valuation
0:12:22 or the market share or the market capitalization
0:12:26 accompanied by 25 to $30 billion in value by using AI
0:12:28 to just speed up the routes, if you will.
0:12:32 This stuff, I would imagine the real impact on the economy
0:12:35 is going to be these little incremental fixes
0:12:39 around efficiency that help people.
0:12:40 I mean, the ultimate business strategy,
0:12:43 the ultimate shareholder strategy
0:12:46 is the same strategy as Walmart and China as an economy.
0:12:48 And that is more for less.
0:12:52 And so I’m a big fan of these little incremental changes.
0:12:55 I think that, you know, Amazon is always,
0:12:56 Amazon is about the boring shit
0:12:57 and about shareholder value.
0:13:00 And this cuts the swath between the two.
0:13:02 – Yeah, I have a feeling we’re not going to disagree
0:13:03 on anything on this episode,
0:13:05 which is going to be a little bit of a shame,
0:13:07 but I think that’s exactly right.
0:13:11 I think when we think about AI,
0:13:13 the predictions are that AI are going to come in
0:13:15 and replace everyone.
0:13:17 But that’s not really what’s going to happen.
0:13:19 What’s going to happen is exactly what’s happening
0:13:20 with Amazon here.
0:13:23 It’s going to just make everything we do
0:13:25 a little bit faster, a little bit cheaper,
0:13:27 a little bit easier.
0:13:29 It’ll be all incremental.
0:13:31 And I like those numbers that you referenced there,
0:13:34 the idea that just shaving off half an hour
0:13:37 in the delivery route will unlock
0:13:39 more than a billion dollars in savings,
0:13:41 which will translate to, you know,
0:13:45 20 to 30 billion dollars in enterprise value.
0:13:49 I think this is how the AI story gets played out.
0:13:50 Now, we can also have a conversation
0:13:53 about how the drivers are going to get slightly screwed here,
0:13:56 because the reality is that the drivers at Amazon
0:13:58 are contract workers, they are gig workers,
0:14:00 which they’re not particularly happy about.
0:14:02 So they’re being paid per hour,
0:14:05 which basically just means that you are taking
0:14:08 that one billion dollars and removing it from their pockets
0:14:10 and putting it in the pocket of Amazon.
0:14:12 And we can talk about how, you know,
0:14:14 that’s maybe you can make the argument
0:14:16 that that is unfair to the drivers.
0:14:18 But I think what really happens is that Amazon
0:14:20 will be taking those savings,
0:14:23 and it’ll be doing this in all parts of the business,
0:14:25 but it’ll take those savings,
0:14:28 and it’s going to invest it in other areas of the business,
0:14:31 which will result in more value creation,
0:14:32 in more commerce.
0:14:33 And I think ultimately,
0:14:35 and this is why I think this is actually a good thing,
0:14:38 it will result in more jobs somewhere else.
0:14:40 – You’re probably too young for this.
0:14:42 I tell you, you didn’t have a paper route when you were a kid.
0:14:43 – No.
0:14:45 – You were probably trying to influence people
0:14:46 on TikTok or something,
0:14:48 but speaking of LA, I had a paper route,
0:14:50 and my route was the Homie Hills,
0:14:52 or I think it was the LA examiner or some paper,
0:14:55 and occasionally, you know,
0:14:57 I’d be late for school or something,
0:14:58 I’d have to do it very early in the morning,
0:15:02 and my mom would agree to drive me around my paper route,
0:15:04 and I’d just throw papers out of her car.
0:15:06 And we would be so frenzied.
0:15:09 My mom was the secretary in the valley,
0:15:12 a lot of traffic, and she’d be, we’d be late.
0:15:14 And I mean, you would not want to get in the way
0:15:17 of our lime green opal manta, you know,
0:15:18 when we were doing our paper route,
0:15:21 might hear kids, you’re irresponsible,
0:15:24 oh, you know, sleeping in kids’ paper route.
0:15:26 You just did not want to be in the way of that car.
0:15:31 We were flying through the Homie Hills doing my paper route.
0:15:34 I feel that way, whenever I’m walking my dogs,
0:15:35 and I see those Amazon delivery people
0:15:38 stay out of their fucking way.
0:15:41 I mean, it’s literally, they are hustling.
0:15:44 And they’re not, the UPS folks,
0:15:45 I mean, they’re very professional,
0:15:47 but they’re in the brown uniform,
0:15:49 and they’re kind of like, hi, how are you?
0:15:52 The Amazon people are like, bitch, get out the way.
0:15:54 If I don’t deliver like 183 packages
0:15:56 in the next 17 minutes,
0:15:58 I come up on some AI automated thing,
0:16:00 and this stone on my hand turns green,
0:16:03 and I’m sent to the vaporizer or whatever.
0:16:07 I mean, that company optimizes human capital.
0:16:12 And those folks, I just think, I mean, it’s a free market.
0:16:15 They are not under any pressure to work for Amazon,
0:16:17 so I guess everyone’s under pressure to have a job,
0:16:22 but they just, there’s a just stay out the way
0:16:24 of an Amazon delivery person.
0:16:26 – Let’s talk about Google
0:16:29 and this Department of Justice opinion,
0:16:32 which is that they are recommending a breakup.
0:16:34 – Well, it somewhat resembles,
0:16:38 it echoes back to the 1999 Microsoft antitrust case
0:16:40 in which the DOJ ruled Microsoft
0:16:43 had created a monopoly in the PC operating system space
0:16:46 and blocked Netscape,
0:16:48 which had kind of the premier browser from competing
0:16:51 by bundling it and basically predatory pricing.
0:16:54 The judge ordered Microsoft to be broken up,
0:16:57 but Microsoft’s appeal kept the company intact.
0:16:59 Now, even if there’s ruling is overturned,
0:17:02 which I don’t think it will be,
0:17:04 it’s actually not antitrust
0:17:06 that creates the most impact on the economy.
0:17:09 It’s the scrutiny during antitrust.
0:17:10 And that is you can bet
0:17:13 that Alphabet is gonna be very careful
0:17:16 about not only acquisitions, but more impactful,
0:17:19 putting small and medium sized companies out of business,
0:17:22 because they know they are being watched very, very.
0:17:23 It’s like when you’re on probation,
0:17:26 you tend to follow the law
0:17:30 because you know you’re on thin ice.
0:17:32 I would love to see this company broken up.
0:17:34 I thought that maybe there was a chance
0:17:36 they would prophylactically spin YouTube
0:17:39 ’cause I think YouTube with a 10% share
0:17:41 of all streaming versus Netflix is 7%,
0:17:43 could be a creative to shareholders.
0:17:44 But it doesn’t look like they’re looking to do that.
0:17:48 The DOJ appears to be considering separating
0:17:50 Google search business from Android Chrome
0:17:52 and Google Play on the App Store.
0:17:54 So I don’t know exactly how those companies
0:17:57 get spawned as a distinct, I guess Android.
0:18:00 Would Android make a shit ton of money, wouldn’t it?
0:18:02 Anyways, it was a distinct company.
0:18:03 But I like this.
0:18:05 I think we need more breakups everywhere.
0:18:09 So back in ’99, the lawsuit against Microsoft
0:18:13 was a complaint that originated from the DOJ,
0:18:15 that Microsoft was selling hardware
0:18:18 that was pre-downloaded with Microsoft software.
0:18:22 So, you know, Internet Explorer, Windows 95, et cetera,
0:18:24 which is basically the exact same complaint
0:18:25 that we’re seeing here
0:18:29 where Google is negotiating these partnerships
0:18:32 such that Google Chrome is the default browser.
0:18:34 It’s a very, very similar dynamic,
0:18:37 which ultimately, you know,
0:18:39 first it went to the district court,
0:18:42 then it went to the Supreme Court who dismissed it,
0:18:43 then it went back and forth
0:18:45 between the district court and the appeals court.
0:18:50 And then ultimately, after four long, boring years,
0:18:53 the Microsoft and the DOJ settled
0:18:55 on an agreement that essentially meant nothing.
0:18:58 And so, you know, I think history would tell us
0:18:59 that what’s gonna happen here
0:19:02 is it’ll go back and forth for four or five years.
0:19:04 We’ll keep on talking about it.
0:19:06 But ultimately, Google will remain intact.
0:19:10 So, you know, we’re in for a long four years
0:19:12 of talking about this is what I will say.
0:19:16 Let’s just wrap up here with Cerebrus.
0:19:19 This investigation from the US government into Cerebrus,
0:19:21 we discussed this company last week,
0:19:24 this AI chip maker, which is backed
0:19:26 and whose largest customer is G42,
0:19:30 which is this AI firm based in Abu Dhabi.
0:19:32 And this is very strange to me,
0:19:36 because you might remember a few months ago,
0:19:39 Microsoft invested in G42.
0:19:41 And they were only able to do that
0:19:44 after they got a national security clearance
0:19:45 from the government.
0:19:47 And the government basically forced G42
0:19:51 to sever its ties with China, which it did.
0:19:52 And then Microsoft was free to invest.
0:19:55 So now Microsoft is an investor in G42.
0:19:57 So, I thought we had already been over this.
0:20:00 I thought that the government had already handled
0:20:03 this national security problem as it relates to G42,
0:20:06 but it seems like something else is afoot.
0:20:08 – Yeah, I don’t know.
0:20:11 I don’t know how much of this is legitimate security concerns
0:20:16 or some sort of protectionist slash jingoist attempt
0:20:19 to make sure that USAI companies maintain their lead
0:20:23 over any competition across foreign entities.
0:20:26 But I take, I think you have to assume
0:20:27 that their concerns are valid,
0:20:29 because what they’re basically saying here
0:20:33 is this is just gonna be nothing but a truck stop
0:20:38 for the transport of sensitive AI technologies
0:20:42 to adversaries or competitors.
0:20:45 And you’re just so vulnerable
0:20:47 when you aren’t that diversified a company.
0:20:50 I mean, I just don’t, I’m curious
0:20:52 if we’re even hearing about this company in a year.
0:20:55 It just kind of popped up really fast AI.
0:20:58 And the government sort of weighed in and said,
0:20:59 “Okay, we don’t understand this,
0:21:02 but we just see that you’re gonna be able
0:21:04 to get to take very sensitive technology
0:21:06 and possibly it’ll end up in the wrong hands.”
0:21:10 So I like it when our, I don’t know,
0:21:12 our regulators and our security apparatus
0:21:15 are very thoughtful about our competitive advantage.
0:21:18 And if you think about our security apparatus,
0:21:20 there’s sort of the perception of spying and espionage.
0:21:21 And the majority of people think
0:21:24 that it’s a James Bond-like character
0:21:26 saving the world from nuclear war and killing people
0:21:29 and avoiding, or even like homeland,
0:21:34 a CIA officer getting into very tense situations
0:21:36 that involve the Islamic Republic
0:21:39 or kind of spy versus spy stuff.
0:21:42 And the vast majority of espionage, as I understand it,
0:21:47 is a very unassuming person who’s an assistant in a company
0:21:52 and every once in a while takes a thumb drive,
0:21:55 downloads a bunch of sensitive information.
0:21:56 And then before you know it,
0:21:58 Huawei is producing cell towers
0:22:01 that look like semen cell towers at a third of the price.
0:22:04 The majority of espionage is actually corporate espionage.
0:22:07 It’s economic theft or IP theft
0:22:09 that the majority of money in spying now,
0:22:14 even I was reading Dow has all of these licenses on,
0:22:16 everything in my room or a bunch of things in my room
0:22:20 are this unique shade of kind of eggshell,
0:22:23 whether it’s my AirPods case or the cup,
0:22:25 but I guess this color is fairly unique
0:22:29 and requires a certain mixture of dyes from different pallets
0:22:31 and they have trademarks on all these dyes
0:22:33 and they make a shit ton of money.
0:22:35 And they figured out somewhere along the lines
0:22:38 that agents of the CCP downloaded
0:22:40 all of the kind of corporate secrets
0:22:42 around how to make all of these different colors
0:22:44 and now they produce them and offer them
0:22:48 to Western customers for a fraction of the price.
0:22:51 And so I like that we’re very protective
0:22:53 of our intellectual property
0:22:55 and very sensitive to the idea
0:22:57 that we need to get in the way
0:22:59 of what is the ultimate economic strategy
0:23:00 and that is IP theft.
0:23:03 And by the way, that was what built America.
0:23:06 We went up and down the Eastern seaboard
0:23:09 and built factories based on stolen technology
0:23:11 from textile factories in the UK
0:23:14 and we even kidnapped and hired artisans
0:23:18 to kind of figure out these machinery and these factories,
0:23:22 but IP theft is the best is by far
0:23:24 the highest ROI strategy for any economy
0:23:27 and that is figure out a way legally or illegally.
0:23:29 I remember when China was launching a space shuttle,
0:23:32 remember that and it happened to look identical
0:23:34 to the US space shuttle.
0:23:36 That is the ultimate economic arbitrage
0:23:39 is let other people do the R&D, let other universities
0:23:41 let them figure it out, let them test it
0:23:43 and then find someone put someone at headquarters there
0:23:46 and have them put that shit on a thumb drive
0:23:47 and port it over to them.
0:23:49 So I think they’re smart to be thoughtful about this
0:23:51 and very cautious about it.
0:23:53 We’ll be right back after the break
0:23:56 with a look at a short seller report on Roblox
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0:27:58 Hindenburg Research has shorted Roblox
0:28:00 accusing the company of inflating its user metrics
0:28:05 and operating a quote pedophile hellscape.
0:28:06 Regarding that first accusation,
0:28:10 Hindenburg estimates Roblox overreports its daily user base
0:28:15 by 25 to 42% and its engagement hours by 100%.
0:28:18 And on the second more alarming point,
0:28:20 Hindenburg claims it found Roblox members
0:28:22 trading child pornography
0:28:26 and soliciting sex from minors on the platform.
0:28:28 Roblox shares initially dropped 10%
0:28:30 following Hindenburg’s report,
0:28:32 but the day after they recovered.
0:28:37 Scott, I know you’ve talked about Roblox in the past.
0:28:38 From my understanding,
0:28:41 you were quite bullish on the company at one point.
0:28:45 What do you make of this new development?
0:28:46 – So I got this wrong.
0:28:48 I mean, I don’t know who to believe here
0:28:51 ’cause obviously the incentives here are for Roblox
0:28:53 or for Hindenburg to push the stock down, right?
0:28:55 They’ve taken a huge short position.
0:28:58 And when you call someone a pedophile hellscape
0:29:00 or a company a pedophile hellscape,
0:29:02 I mean, that’s just not nice to say about the Catholic church.
0:29:05 Oh wait, they’re talking about Roblox.
0:29:08 Sorry, anyways, little Freudian slipped there.
0:29:09 Little Freudian slipped.
0:29:10 I don’t know what to think here.
0:29:12 Roblox has about 3,000 moderators.
0:29:15 TikTok has three times the number of daily users,
0:29:17 but 13 times more moderators.
0:29:21 In 2023, Roblox reported over 13,000 incidents
0:29:22 of child exploitation in the National Center
0:29:24 for missing and exploited children
0:29:26 up from 3,000 the year before.
0:29:29 It also responded to more than 1,300 subpoenas
0:29:31 and search warrants from law enforcement,
0:29:34 a jump of almost one-third from 2022.
0:29:36 I’m just sort of headed the same way here.
0:29:41 And that is, I think that these companies
0:29:44 could figure out a way to make sure,
0:29:46 like if you walk by a park,
0:29:49 they have these signs that say no adults allowed
0:29:51 unless accompanied by children.
0:29:53 They don’t want strange adults hanging around
0:29:55 in the kid park.
0:29:57 I mean, first off, if you look at the data,
0:29:59 we overprotect children offline
0:30:01 and we underprotect them online.
0:30:04 They could figure out a way to ensure
0:30:06 that there are no adults on this platform
0:30:10 or anonymous accounts messaging kids.
0:30:12 And I don’t doubt that it’s difficult,
0:30:15 but these firms manage to solve much more difficult problems
0:30:17 when there’s a profit incentive.
0:30:20 The hard part here, Ed, is you have a company
0:30:25 whose incentive is to exaggerate everything.
0:30:27 And I’m not saying there’s not a problem here,
0:30:30 but if Surgeon General Vivek Murthy came out with this,
0:30:34 I would give it a lot more credence, veracity.
0:30:35 What are your thoughts?
0:30:38 – Yeah, the two accusations are,
0:30:41 one, that they inflated their user numbers.
0:30:42 And the specific accusation is that
0:30:45 there are many bots on Roblox.
0:30:47 And so they’re saying that Roblox is double counting
0:30:49 and counting bots in their numbers.
0:30:53 And the second is that it’s a pedophile hellscape.
0:30:55 And I think that both of those accusations are true.
0:31:00 But to your point, I think those accusations are also true
0:31:04 of basically every single platform on the internet.
0:31:08 So from Twitter, which has openly admitted
0:31:10 to overstating its user numbers,
0:31:15 which was a huge problem during the whole Elon acquisition,
0:31:18 to Instagram, which according to studies
0:31:20 is a host of nearly a third
0:31:23 of all child predator interactions,
0:31:28 to Facebook, a platform from which 94%
0:31:31 of child pornography originates.
0:31:34 This is just a description of the internet,
0:31:37 fake, lying about the numbers,
0:31:41 and also hosting the exploitation and abuse of children.
0:31:44 So it’s just ubiquitous.
0:31:45 And I think the reason we’re paying
0:31:48 a little bit more attention to Roblox here
0:31:52 is because it is specifically targeted to children.
0:31:55 So if you just look at the demographic numbers,
0:31:59 42% of Roblox’s users are under the age of 13
0:32:03 and 58% are under the age of 17.
0:32:07 So this really is a children’s platform.
0:32:10 But I would hope that we can take this level of scrutiny,
0:32:12 which I do think is warranted.
0:32:14 And I would hope that we can start applying it
0:32:17 to the rest of the internet companies.
0:32:19 Because for some reason, as you pointed out,
0:32:22 we have a much higher bar for what constitutes
0:32:26 illegal and immoral practices in the physical world
0:32:29 far higher than we do in the digital world,
0:32:31 despite the fact that we are now leading
0:32:35 the majority of our waking lives on the internet.
0:32:36 – There’s clearly a problem.
0:32:39 Whether it qualifies as a pedophile hellscape
0:32:41 is unfair relative to the other platforms.
0:32:43 I think we’re gonna find out.
0:32:46 But just looking at it through a shareholder lens,
0:32:49 the stock is probably overvalued.
0:32:50 It trades at 8.6 times sales,
0:32:54 which is a 57% premium to gaming peers.
0:32:57 And a 2022 survey found that 21% of children in the US
0:33:01 who played Roblox spent more than 10 hours per week
0:33:02 on the platform.
0:33:06 There’s just too much shareholder value in addiction.
0:33:08 – Especially the addiction of children.
0:33:09 – The addiction of kids.
0:33:11 And you just think about how,
0:33:15 quite frankly, just fucked up this is.
0:33:17 It’s very, it’s really frightening.
0:33:19 And I was kind of hoping Roblox would be the good guy
0:33:22 or the good gal that spent a disproportionate amount
0:33:25 of the money and created a safe place online for kids.
0:33:28 But there’s just so much money in addiction
0:33:32 and going further and further downstream to younger people.
0:33:34 And you can just see an environment
0:33:37 where I think we’re just gonna punch out millions of kids
0:33:40 who are just dopa monsters.
0:33:43 – It’s also interesting to me one that Roblox
0:33:48 is sort of built off of the backs of developers
0:33:50 because it’s not Roblox,
0:33:53 the company that is developing games within the platform.
0:33:56 It’s the users who are developing the games
0:33:57 within the platform.
0:34:00 So that’s a very interesting detail.
0:34:02 And it was something that I think Roblox
0:34:08 touted because it basically said
0:34:10 that it’s gonna benefit from network effects.
0:34:13 And look how enthusiastic our users are.
0:34:16 They’re actually building within the game.
0:34:17 But I’ve never really liked this company
0:34:20 ’cause you think about what that actually means.
0:34:21 You think about that number.
0:34:26 42% of the usership is below the age of 13,
0:34:29 which means that the developers
0:34:31 are 12 year old kids actually.
0:34:34 It’s 12 year olds who are going online
0:34:36 and who are building these games on Roblox.
0:34:39 And so when you really think about it,
0:34:41 what Roblox has done is they have figured out a way
0:34:45 to siphon value from children
0:34:47 who are getting addicted to the platform
0:34:49 and creating games on the platform
0:34:51 and basically not paying them.
0:34:54 The retort from Roblox would be actually we do pay them.
0:34:56 We pay them in Robux.
0:35:00 My response is Robux is a virtual currency
0:35:03 that you can only spend inside the game.
0:35:06 And this goes back to the early 1900s,
0:35:10 this idea of script where you’d have mining companies
0:35:12 and logging companies who would pay their employees
0:35:15 with internal currency that could only be used
0:35:17 to buy things within the company’s camp.
0:35:19 And it essentially forced workers
0:35:21 to spend money at the company.
0:35:25 And this was something we banned in the US in the 30s.
0:35:28 So this to me is a very similar thing
0:35:30 that I think it’s very easy to,
0:35:32 I think they did an incredible job
0:35:35 of making it seem optimistic and exciting
0:35:38 and it’s encouraging children to be entrepreneurial.
0:35:40 But when you really think about it,
0:35:42 it’s a very similar dynamic.
0:35:45 If this weren’t an online company,
0:35:47 if this weren’t happening on the internet,
0:35:51 I think we’d be a lot more concerned
0:35:52 about this business model.
0:35:55 And I think it’s highly likely that we’d say,
0:35:56 “Actually, this is illegal.”
0:36:01 I mean, even the sexual exploitation that we’re seeing,
0:36:04 and I’ll just give you some anecdotes
0:36:07 of what has happened in the past couple years.
0:36:08 So this year in New Jersey,
0:36:10 there was an 11-year-old girl who was kidnapped
0:36:12 by a man that she met on Roblox.
0:36:14 And last year in Indiana,
0:36:16 there was a 15-year-old girl who was kidnapped by a man
0:36:17 she met on Roblox.
0:36:20 And in Utah, there was a 13-year-old boy
0:36:22 who was abducted and sexually abused
0:36:24 by a man that he met on Roblox.
0:36:25 And there have been many, many others.
0:36:28 As I mentioned, this happens on the other platforms too.
0:36:31 A lot of sexual predators meeting kids on Facebook,
0:36:33 on Instagram, on Snapchat, et cetera.
0:36:35 But I think the question becomes,
0:36:39 if this were a physical company,
0:36:43 would we be saying that this is flat out illegal?
0:36:47 To what extent is Roblox responsible for the fact
0:36:49 that sexual crimes against children
0:36:51 are originating on its platform?
0:36:52 – You’re absolutely right.
0:36:54 I was just thinking, just as you said that,
0:36:55 you inspired a thought.
0:36:57 And that is, what if over the last couple of years,
0:37:00 Disney, which is a bigger company, worth a lot more,
0:37:04 what if three kids in the last, whatever it is, 24 months,
0:37:06 three teenagers had been kidnapped and abused
0:37:07 from a Disney park?
0:37:12 I mean, they shut the fucking park down.
0:37:14 Or there would be cameras everywhere
0:37:17 and you would be able, I mean, airlines.
0:37:19 What if all of a sudden on airlines,
0:37:21 people, kids were being kidnapped?
0:37:23 I used to travel when I was a kid.
0:37:25 Well, after my parents got divorced,
0:37:27 I would travel alone on an airline.
0:37:28 My mom would drop me off
0:37:30 and I’d get a little sticker saying,
0:37:32 I’m a traveling minor alone
0:37:34 and they’d look out for me or what have you.
0:37:39 But what if, now, if I’m traveling alone with my sons,
0:37:41 sometimes I’m asked for a letter,
0:37:45 like a notarized letter from their mother
0:37:47 saying it’s okay that I travel
0:37:49 and take them out of the country with,
0:37:51 I need her permission.
0:37:52 ‘Cause the airlines are like,
0:37:55 we just can’t have kids kidnapped, we can’t.
0:37:58 But if you do it online and it involves innovation
0:38:01 and digital, it’s the Wild West.
0:38:03 And you’re exactly right.
0:38:06 What would happen if these kids were being kidnapped
0:38:12 at EPCOT or at Universal Studios?
0:38:15 They just would shut, they’d shut the fucking thing down.
0:38:16 I’m with you.
0:38:19 I think what you said was really powerful.
0:38:20 We’ll be right back after the break
0:38:22 with a look at Germany’s struggling economy.
0:38:24 And if you’re enjoying the show,
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0:40:14 – We’re back with ProfG Markets.
0:40:16 Germany’s economy is expected to shrink
0:40:18 for the second year in a row.
0:40:21 The government’s 2024 GDP forecast
0:40:24 was revised down from 0.3% growth
0:40:26 to a 0.2% contraction.
0:40:28 That’s disappointing.
0:40:31 They’re not entirely surprising news for the country.
0:40:34 Last year, Germany’s economy was the weakest
0:40:37 of its large Eurozone peers.
0:40:39 So, Scott, I can get into the details
0:40:42 of what I think the main issues are,
0:40:43 why this is happening in Germany.
0:40:47 But I would like to just get your initial reaction,
0:40:50 having just been in Germany and Munich.
0:40:51 Does this surprise you at all?
0:40:52 What are your thoughts?
0:40:54 – Yeah, quite frankly, it does surprise me.
0:40:57 So, a lot of people would argue that our growth
0:40:59 is artificial and masked by the fact
0:41:02 that I’m taking your credit card
0:41:07 and pushing $2 trillion that are not being paid for
0:41:08 that are going on your credit card
0:41:10 into the economy, which creates growth,
0:41:11 or at least the illusion of growth
0:41:14 that might come back and bite us in the ass.
0:41:15 Like, I can create the illusion of growth
0:41:16 if you give me a credit card
0:41:18 where I spent $70,000 on a household
0:41:21 that’s making $50,000, which is effectively
0:41:22 what we’re doing right now.
0:41:25 They essentially have a balanced budget policy.
0:41:27 The Germans are grown-ups.
0:41:30 And they say they limit the federal deficit
0:41:34 to 0.35% of GDP, which has limited their ability
0:41:36 to make these sort of four-leaning infrastructure investments
0:41:37 that quite frankly, sometimes pay off
0:41:40 and grow the economy faster than the deficit.
0:41:42 But in the short run, at a minimum,
0:41:43 kind of juice the economy.
0:41:45 And they said, no, we’re the adults in the room,
0:41:48 we’re not going to have this kind of sugar high of growth.
0:41:52 And they kept through from 2014 to 2019,
0:41:54 Germany posted budget surpluses and interest rates
0:41:56 were negative.
0:41:58 The government kept infrastructure investments to a minimum.
0:42:00 Now German automakers, including Volkswagen,
0:42:02 are struggling to compete with more modernized
0:42:04 EV makers in China.
0:42:06 I think that, I mean, if you look,
0:42:08 the numbers are pretty striking here.
0:42:13 So the GDP growth in 2024 in the US was 2.5%.
0:42:17 In the UK, it’s 1.1%, the Eurozone, it’s 0.7%,
0:42:19 Japan, negative 0.1%, Germany, negative 0.2%,
0:42:22 India, plus seven.
0:42:24 And then if you look at the stock markets,
0:42:28 Germany’s DAX over the last 10 years is up 37%
0:42:32 and the SP has to get this up 200%.
0:42:33 I mean, it’s just amazing.
0:42:38 The Nikkei is up 157, the Nifty 50 and India is up 216,
0:42:40 but still on a risk-adjusted basis,
0:42:42 we’ve just outperformed everyone.
0:42:46 Germany’s public investment to GDP ratio is 2.6%,
0:42:49 which is lower than the Eurozone at 3.1
0:42:51 and the US at 3.3.
0:42:54 If I were to try and talk about
0:42:57 what is holding back the German economy,
0:43:01 it’s a weird, it’s a weird duality.
0:43:06 And that is, if you get out of Germany in high school
0:43:09 and you took auto shop or you’re just fairly,
0:43:12 fairly talented or handy or disciplined,
0:43:17 you can get a pretty good job working in the auto industry
0:43:19 and find a decent place to live.
0:43:20 And if your partner works,
0:43:23 you can have a pretty nice middle-class life there
0:43:25 on a middle-class salary.
0:43:28 And in the US, you can’t.
0:43:29 And so the motivation,
0:43:31 America believes in winners and losers.
0:43:35 And the upside to a lack of a safety net
0:43:37 and a lack of opportunity,
0:43:38 and I hate to frame it this way,
0:43:41 is people in the US are very motivated to take risks
0:43:45 and start business and try and crawl up the ladder.
0:43:49 I don’t think the same incentives are in place in Germany.
0:43:53 Germany has had an incredible lack of innovation.
0:43:57 There’s just strikingly few unicorns in Germany.
0:43:59 It’s an economy, it’s the biggest economy in Europe.
0:44:01 And I believe the UK,
0:44:06 because of its payments companies has more unicorns.
0:44:08 So in a weird way, I wonder if the safety net
0:44:10 or the fact that you can have a nice life
0:44:12 without taking the types of risks
0:44:14 that Americans are more apt to take
0:44:16 has hurt some of their innovation.
0:44:18 ‘Cause name, well, let me do this.
0:44:20 Can you name a unicorn to come out of Germany?
0:44:22 Can you name any cut Germany
0:44:24 as a third largest economy in the world?
0:44:27 What tech company can you name out of Germany right now?
0:44:29 – The company I think it was SAP,
0:44:33 Enterprise SAS, and they’ve done very well.
0:44:35 But if you look at the rest of the economy,
0:44:37 you’re exactly right.
0:44:39 It’s not tech companies, it’s not software,
0:44:43 it’s not services, it’s basically all industrial companies,
0:44:45 mostly just auto companies.
0:44:46 And the stat that I have here,
0:44:48 which I just find remarkable,
0:44:51 is that NVIDIA alone is more valuable
0:44:55 than the entire German stock market combined.
0:44:57 But there are a couple of things
0:44:59 that you said there in that macro data,
0:45:01 which I think are quite interesting.
0:45:05 One was you were mentioning this
0:45:07 public infrastructure spending,
0:45:08 it’s public investment,
0:45:11 which is only 2.5% of GDP,
0:45:13 and that’s far lower than the rest of Europe,
0:45:15 and it’s also a lot lower than the US,
0:45:19 and we’re not even that big into public infrastructure.
0:45:21 So that’s one piece.
0:45:25 The other piece is the debt that you mentioned.
0:45:28 So the debt to GDP ratio in Germany is around 60%,
0:45:31 which is way, way lower than us,
0:45:33 way, way lower than the rest of the G7.
0:45:36 And if you look at the private sector in Germany,
0:45:41 there is this big surplus of savings among companies.
0:45:43 So private sector savings
0:45:46 make up roughly a third of GDP in Germany,
0:45:51 which is again far higher than the rest of its peers.
0:45:54 So two main insights here,
0:45:58 which is that Germany is very, very scared/reluctant
0:46:00 about spending,
0:46:04 and two, they’re very, very afraid of debt.
0:46:09 It’s basically the polar opposite of the US.
0:46:11 And I think that you can argue,
0:46:14 maybe you could argue that that demonstrates
0:46:17 that they are fiscally responsible.
0:46:18 They don’t wanna just overspend,
0:46:22 they don’t wanna just borrow to the hilt like we do.
0:46:24 But what’s interesting is we’re also seeing
0:46:28 the other side of being perhaps too responsible,
0:46:30 perhaps not risk aggressive enough,
0:46:32 which is the great thing about debt
0:46:35 is that you borrow money and you take the risk
0:46:37 and then you invest that capital
0:46:39 into building things into the future.
0:46:42 And that’s what a lot of companies do too.
0:46:45 So I’d be interested to see here
0:46:47 how you view that balance
0:46:50 because I’m looking at Germany’s economy right now.
0:46:54 And to me, this is the dark side of being responsible.
0:46:57 This is the dark side of being fiscally conservative.
0:47:00 Your economy just starts to wither and wilt
0:47:03 and now they are officially in a two year long recession.
0:47:05 – Well, there is good debt
0:47:08 in the sense that when I was on the board
0:47:11 of Urban Outfitters back in the,
0:47:13 I was there for four years from I think,
0:47:18 2018 to 2022 and we had Goldman, our bankers come present.
0:47:20 And I asked, how much can we borrow money at?
0:47:23 We didn’t need money, we were spending our cash.
0:47:26 And they said, well, you could probably borrow money.
0:47:27 I think it was like at 2 1/2%.
0:47:29 And I’m like, why wouldn’t we go borrow
0:47:30 a couple of billion dollars
0:47:34 and either get very aggressive around acquisitions
0:47:36 or get, or buy stock back.
0:47:39 I mean, if you can borrow money, there is good debt.
0:47:43 And as long as you can justify forward-leaning investment,
0:47:45 and sometimes when your economy goes into the doldrums,
0:47:48 it does make sense to, you know,
0:47:51 to quite frankly, turn the printing presses on
0:47:53 and try and jumpstart the economy.
0:47:56 The tough part in what economies typically don’t do
0:47:58 is that, or we haven’t done since the Clinton years,
0:48:02 is when it’s the economy’s strong to maintain some discipline,
0:48:04 even cut some costs while the economy is strong,
0:48:06 ’cause cutting costs while the economy is strong,
0:48:08 you’re not gonna send it into a recession
0:48:12 ’cause hopefully the economic, the tailwinds supersede
0:48:16 or greater than the headwinds of cutting your spending.
0:48:18 We don’t do that anymore.
0:48:21 We, it’s like, we, okay, we can make an excuse
0:48:23 to pump $7 trillion in the economy during COVID.
0:48:26 You can make a really rational argument and they made it
0:48:28 that it’s better to overdo it than to underdo it.
0:48:31 But then when the economy comes ripping back
0:48:34 and company stocks are going fucking crazy,
0:48:35 do we say, okay, now it’s time
0:48:37 to pay a little bit more back?
0:48:39 No, we don’t.
0:48:41 So I would, you know, Germany is probably also,
0:48:43 I think the thing we haven’t been talking about also
0:48:45 is that Germany made a very big bet,
0:48:49 and I forget the term, where they would engage Russia.
0:48:52 And I would have made the same argument.
0:48:55 Basically when a country opens a McDonald’s,
0:48:57 it’s less likely to go to war with us.
0:49:00 And they said, if we engage Russia in commerce,
0:49:02 specifically around energy, it’ll be good for us.
0:49:05 They started unplugging their nuclear reactors
0:49:07 and they became way too dependent.
0:49:10 Their energy costs skyrocketed
0:49:12 through their economy into a bit of a freeze.
0:49:14 – Just to clarify on that point though,
0:49:18 because that is, that was the beginning of their problems.
0:49:21 And I think they’re still blaming their issues
0:49:24 on the Russia problem where they were too reliant
0:49:25 on Russian energy.
0:49:28 But if you look at gas prices, they have sort of normalized.
0:49:31 So at this point, they can’t be making that argument.
0:49:34 But to your point, yes, that’s where it all sort of began.
0:49:36 – The final point I want to make here
0:49:39 is that the most important company in my view right now
0:49:42 in Germany is a company that’s a unicorn.
0:49:44 It’s a company called Salonis.
0:49:46 It’s a SaaS business workflow company
0:49:50 that helps optimize decision making for businesses,
0:49:52 creates efficiencies, finds where they’re,
0:49:56 where business improvement processes are most ripe
0:49:56 where they should invest.
0:49:58 – Sounds very boring and very profitable.
0:50:00 – This company’s on fire.
0:50:03 And I think they’re gonna do six or 700 million in revenue.
0:50:07 They’re growing like crazy, super impressive founders.
0:50:10 And what happens is when you have one unicorn,
0:50:13 hopefully it goes public, hopefully it has a huge pop.
0:50:15 And then the wealth that creates internally,
0:50:18 people decide, I have family in Stuttgart
0:50:21 or I have family in Hamburg, I’m gonna stick here.
0:50:23 And they become rich and they start a venture capital firm
0:50:26 and they start investing locally.
0:50:30 Germany is dying for a unicorn.
0:50:34 If I were the German head of industrial growth
0:50:35 or whatever in Germany,
0:50:38 I would really be rooting for Salonis
0:50:43 because they need a big winner here to inspire.
0:50:46 Everyone talks about Berlin being this hub,
0:50:49 the central hub for innovation and tech.
0:50:51 Okay, who?
0:50:51 Like what?
0:50:53 What’s come out of there?
0:50:56 So they need a big win.
0:50:59 The reason why I think Germany will,
0:51:02 I mean, I’m just an enormous fan of Germany.
0:51:04 One, I think culture matters.
0:51:05 I think quality of life.
0:51:08 I mean, Munich is just a spectacular city.
0:51:10 If I spoke German, I would live in Munich.
0:51:13 They have fantastic football,
0:51:15 which is obviously very important.
0:51:17 But these are wonderful cities.
0:51:19 England basically has London.
0:51:20 France basically has Paris
0:51:21 and I’m gonna get shit for that.
0:51:23 But they have one economic center.
0:51:28 Germany has five or six really strong industrial centers.
0:51:30 They work hard, they play hard.
0:51:31 The other thing about Germany,
0:51:32 and this is totally off topic,
0:51:33 if you know anything about German history
0:51:36 and it’s kind of a cautionary tale,
0:51:38 if you were to pick the society
0:51:40 that has been the most progressive,
0:51:41 the most forward thinking,
0:51:43 the embrace of jury trials,
0:51:44 the embrace of immigrants,
0:51:46 the embrace of academia,
0:51:49 the embrace of a thriving gay community.
0:51:51 Over the last 200 years,
0:51:52 who would be the most progressive
0:51:55 over that 200 year frame?
0:51:59 It would be Germany with a huge asterisk
0:52:03 around this 11 year descent into darkness.
0:52:04 But Germany is really arguably
0:52:06 one of the most progressive enlightened societies
0:52:08 in the world.
0:52:09 And so I think people,
0:52:12 and only as the economic engine of Europe,
0:52:15 if they sneeze, all of Europe catches a cold.
0:52:16 You know, you got a roof for Germany.
0:52:18 Anyone who spent time in Germany,
0:52:20 you just realize that this is kind of,
0:52:23 this is just a wonderful Western nation.
0:52:24 So I’m rooting for them,
0:52:27 but they, oh my gosh, they are desperate.
0:52:30 No country has been more ripe or deserving
0:52:31 of a unicorn right now
0:52:35 that re-inspires or reignites the tech community
0:52:36 than Germany.
0:52:38 – Yeah, but it all plays into the same thing,
0:52:40 which is they need to take more risk.
0:52:44 And you know, you need to invest in risk capital.
0:52:46 You need to start looking at startups
0:52:48 and start investing in them
0:52:50 and making slightly bolder bets.
0:52:52 The one other detail,
0:52:54 which I think is very important
0:52:56 when it comes to Germany’s economy
0:52:59 is this demographic problem.
0:53:02 So in the US, the average age,
0:53:06 the median age in the US is 39.
0:53:10 The median age in Germany is 47.
0:53:13 It is the fourth oldest country in the world.
0:53:14 – Really?
0:53:15 – And as a result,
0:53:18 they have been seeing their labor force start to shrink,
0:53:21 which they have slightly been addressing
0:53:22 through immigration,
0:53:24 but immigration has become a political issue
0:53:27 and an actual issue in some cases.
0:53:29 And so that might not continue.
0:53:32 So it’s continuing to shrink and it is expected,
0:53:34 the labor force, the working age population
0:53:38 is expected to decrease over the next five years
0:53:41 three times faster than the Eurozone average
0:53:44 and six times faster than the US.
0:53:48 So this is a very, very old nation,
0:53:51 which means you’re gonna see a lot more pressure
0:53:54 on its pension program, its social security program.
0:53:59 And also it’s gonna be just a far less productive society,
0:54:01 a less productive economy.
0:54:05 So it’s sort of the worst of both worlds here,
0:54:07 where they’ve already got their issues.
0:54:08 They need to start figuring out a way
0:54:10 to get out of that hole.
0:54:11 But if you look at the demographics issue,
0:54:13 which I agree with you on,
0:54:17 I believe is one of the most important forces in economics.
0:54:19 It does not look good for Germany.
0:54:20 – Well, as Peter Drucker said,
0:54:22 kind of my role model around economics,
0:54:25 he just always said demographics are destiny.
0:54:27 If you look at any industry,
0:54:28 it can usually,
0:54:30 its decline or its ascent can be reverse engineered
0:54:31 to demographics.
0:54:33 And what you’re saying is it’s a really ugly picture.
0:54:35 The advantage they have
0:54:37 is that they will always be an attractive place
0:54:38 for immigrants.
0:54:42 And I would think they’d be able to solve that birth-earth.
0:54:45 But anyways, it’ll be interesting.
0:54:49 But I’m a huge fan of,
0:54:50 I think we’re rooting for Germany.
0:54:52 I think they’re a fantastic ally
0:54:54 and just a wonderful culture.
0:54:57 – Let’s take a look at the week ahead.
0:55:00 Second quarter earnings season continues with the banks,
0:55:01 Goldman Sachs, Bank of America,
0:55:04 US Bank and Morgan Stanley are all reporting.
0:55:07 And we’ll also see earnings from Johnson and Johnson,
0:55:10 American Express and Netflix.
0:55:11 Scott, do you have any predictions for us?
0:55:13 – Well, I just think we’re about to see
0:55:18 the first major externality of AI.
0:55:19 And that is,
0:55:23 I believe that some of the misinformation around FEMA,
0:55:26 which is really dangerous and has been spread by people,
0:55:29 including this guy who owns an EV company
0:55:31 and sends shit into space.
0:55:36 Spreading misinformation that you can’t trust FEMA
0:55:38 or that they’re spending their run out of money
0:55:39 and they’re spending it on illegal immigrants.
0:55:42 All of this misinformation creates confusion
0:55:44 across people who are really suffering
0:55:49 and need good information on how to access resources
0:55:50 when in need.
0:55:54 That is a dumpster fire compared to the nuclear mushroom cloud
0:55:55 we’re gonna experience over the next three weeks
0:55:58 in terms of the run up to the election.
0:56:01 A combination of increased social media activity,
0:56:04 the ability to generate content through AI,
0:56:08 just spin up tens of thousands of fake accounts,
0:56:10 test a million times per second,
0:56:13 the iteration of content that goes viral,
0:56:15 a polarized media environment.
0:56:18 I think we’re gonna see all sorts of videos,
0:56:21 deep fake videos of violence at polling stations
0:56:23 and key swing districts.
0:56:26 I think that just the zone is gonna get so flooded
0:56:30 with misinformation that it’s gonna discourage people
0:56:34 to vote and not know what’s true, what isn’t.
0:56:37 And all the platforms are gonna feel really bad about it
0:56:39 the day after the election.
0:56:42 And the fear is what happens,
0:56:45 not only what happens leading up to the election,
0:56:48 but the misinformation that then gets distributed
0:56:50 around quote unquote a fake election.
0:56:54 What happens when two people show up on inauguration day,
0:56:57 each with their own supporters
0:56:59 and even their own army potentially?
0:57:01 I mean, this shit could,
0:57:03 it could spin out of control pretty fast.
0:57:06 And the ability to generate misinformation,
0:57:09 test it and then distribute it across these porous platforms
0:57:11 who don’t, as you referenced,
0:57:14 just have not put in place safeguards.
0:57:16 This is the first big externality.
0:57:21 This is the first big puff of carbon into the air of AI.
0:57:23 It’s gonna be misinformation over the next three
0:57:25 to four weeks leading up to the election.
0:57:32 – This episode was produced by Claire Miller
0:57:34 and engineered by Benjamin Spencer.
0:57:36 Our associate producer is Alison Weiss,
0:57:37 our executive producer is Catherine Dillon,
0:57:39 Mia Silverio is our research lead
0:57:42 and Drew Burroughs is our technical director.
0:57:43 Thank you for listening to “Prof.G Markets”
0:57:45 from the Vox Media Podcast Network.
0:57:47 Join us on Thursday for a conversation
0:57:50 with Alice Hahn only on “Prof.G Markets”.
0:57:56 ♪ Lifetimes ♪
0:58:03 ♪ You help me ♪
0:58:08 ♪ In kind reunion ♪
0:58:15 ♪ As the world turns ♪
0:58:20 ♪ And the dark lights ♪
0:58:23 ♪ In light ♪
0:58:25 (gentle music)