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0:00:45 – So you’ve arrived.
0:00:47 You head to the Brasserie, then the terrace.
0:00:48 Cocktail?
0:00:52 Don’t mind if I do.
0:00:54 You raise your glass to another guest
0:00:57 because you both know the holidays just beginning.
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0:01:13 Virgin Atlantic, see the world differently.
0:01:21 – I’m Sky Galloway, and this is No Mercy, No Malice.
0:01:24 We’ve decided that children should not have access
0:01:29 to the military, alcohol, driving, pornography,
0:01:31 and many other things.
0:01:35 Social media, come one, come all.
0:01:37 Age-gating, as read by George Hahn.
0:01:44 – I’m in a dark place.
0:01:46 I just watched democracy collapsing
0:01:50 as a con man abused an old man.
0:01:52 I haven’t hit rock bottom yet,
0:01:55 so let’s discuss social media and age-gating.
0:01:59 Social media is unprecedented
0:02:02 in its reach and addictive potential,
0:02:06 a bottomless dopa bag that fits in your pocket.
0:02:09 For kids, it poses heightened risks.
0:02:13 The evidence is overwhelming and has been for a while.
0:02:17 It just took a beat to absorb how brazen the lies were.
0:02:19 We’re proud of our progress.
0:02:22 Social media can be dangerous.
0:02:24 That doesn’t make it net bad.
0:02:27 There’s plenty of good things about it.
0:02:31 But similar to automobiles, alcohol, and AK-47s,
0:02:34 it has a mixed impact on our lives.
0:02:36 It presents dangers.
0:02:39 And one of the things a healthy society does
0:02:42 is limit the availability of dangerous products
0:02:46 to children who lack the capacity to use them safely.
0:02:51 Yet two decades into the social media era,
0:02:54 we permit unlimited all-ages access
0:02:57 to this dangerous addictive product.
0:02:58 The reason?
0:03:00 Incentives.
0:03:04 Specifically, the platforms disincentivized
0:03:07 to age-gate their products throw sand in the gears
0:03:10 of any effort to limit access.
0:03:15 To change the outcome, we must change the incentives.
0:03:20 I’m a better person when I drink.
0:03:23 More interesting and more interested.
0:03:25 One of the reasons I work out so much
0:03:28 is so I can continue to drink.
0:03:31 Muscle absorbs alcohol better than fat does.
0:03:33 Kids are different.
0:03:35 And we’ve long been comfortable
0:03:37 treating them differently.
0:03:41 In 1838, Wisconsin forbid the selling of liquor to minors
0:03:43 without parental consent.
0:03:47 And by 1900, state laws setting minimum drinking ages
0:03:48 were common.
0:03:50 There’s a good case to be made
0:03:54 that the U.S. alcohol limit of 21 is too high.
0:03:56 But nobody would argue we should dispense
0:03:58 with age-gating booze altogether.
0:04:02 That trend has paralleled laws
0:04:05 restricting childhood access to other things.
0:04:08 The right to bear arms is enshrined in the Constitution,
0:04:10 yet courts don’t blink at keeping guns
0:04:12 out of the hands of children,
0:04:14 even as they dismantle every other limitation
0:04:16 on gun ownership.
0:04:17 If there’s a lobbying group trying
0:04:20 to give driver’s licenses to 13-year-olds,
0:04:21 I can’t find it.
0:04:25 Age of consent laws make sex with children a crime.
0:04:27 Minors are not permitted to enter into contracts.
0:04:30 We limit the hours and conditions in which they can work.
0:04:33 They cannot serve in the military or on juries,
0:04:36 nor are they allowed to vote.
0:04:38 That last one we may want to reconsider.
0:04:41 These are not trivial things.
0:04:44 On the contrary, we exclude children
0:04:47 from or substantially limit their participation
0:04:51 in many core activities of society.
0:04:55 The only time I have appeared on a late night TV
0:04:58 was when Jimmy Fallon mocked me,
0:05:00 showing a CNN video clip where I said,
0:05:03 “I would rather give my 14-year-old son
0:05:06 “a bottle of Jack Daniels in marijuana
0:05:08 “than an Instagram and a Snap account.”
0:05:12 4,000 likes and 265,000 views later,
0:05:14 it appears America agrees.
0:05:17 My now almost 17-year-old son has engaged
0:05:20 with all three substances.
0:05:23 Alcohol and Instagram make him feel worse afterward.
0:05:25 Not sure about weed.
0:05:27 However, he is restricted from carrying
0:05:29 a bottle of Jack in his pocket,
0:05:31 and his parents would ask for a word
0:05:34 if his face was hermetically sealed to a bong.
0:05:37 Note, spare me any bullshit parenting advice
0:05:40 from non-parents or therapists
0:05:42 whose kids don’t come home for the holidays.
0:05:47 He, we, and society restrict his access
0:05:49 to these substances,
0:05:51 and when he abstains from drinking or smoking,
0:05:54 he isn’t sequestered from all social contact
0:05:57 and the connective tissue of his peer group.
0:06:01 We freaked out when we found, as you will if you have boys,
0:06:04 porn on one of his devices.
0:06:06 But the research is clear.
0:06:07 We should be more alarmed
0:06:12 when we find Instagram, Snap, or TikTok on his phone.
0:06:14 Mark Zuckerberg and Sheryl Sandberg
0:06:17 are the pornographers of our global economy.
0:06:21 Actually, that’s unfair to pornographers.
0:06:25 Age-gating social media is hugely popular.
0:06:28 Over 80% of adults believe parental consent
0:06:30 should be required for social media
0:06:34 and almost 70% want platforms
0:06:37 to limit the time minors spend on them.
0:06:40 Those numbers are from last fall
0:06:43 before my NYU colleague, Jonathan Haidt,
0:06:46 published The Anxious Generation,
0:06:49 which builds on the work of Jean Twenge and others,
0:06:51 making the most forceful case yet
0:06:54 that social media is hurting our children.
0:06:59 Reviewing the shocking increase in depression, self-harm,
0:07:03 and general suffering our children are experiencing,
0:07:07 and the explanations offered by the platform apologists,
0:07:10 Professor Haidt highlights the twin specters
0:07:13 of social media and mobile devices
0:07:17 and the lasting damage they’re doing to a generation.
0:07:21 Unconstrained smartphone use, Haidt observes,
0:07:25 has been, quote, “The largest uncontrolled experiment
0:07:29 “humanity has ever performed on its own children,”
0:07:33 unquote, and the results are in.
0:07:36 Legislatures are responding.
0:07:39 States from California to Utah to Louisiana
0:07:41 have passed laws that limit access
0:07:43 to social media based on age.
0:07:45 If you haven’t noticed any change
0:07:47 in the behavior of the platforms, however,
0:07:51 that’s because courts have blocked nearly all of them.
0:07:54 A social media and digital commerce trade group
0:07:58 called NetChoice is quick to sue any state
0:08:00 that interferes with its members’ ability
0:08:03 to exploit children for maximum profit.
0:08:07 Judges are siding with the platforms,
0:08:10 and probably not because they enjoy seeing depressed teenagers
0:08:13 fed content glorifying self-harm
0:08:18 or teenage boys committing suicide after being sex-storted.
0:08:21 The platforms and other opponents of these laws,
0:08:25 such as the ACLU, make two main points.
0:08:29 First, they claim that verifying age online
0:08:32 is too complicated, requiring the collection
0:08:34 of all sorts of information about users
0:08:37 and won’t work in all cases.
0:08:41 Second, requiring users to collect this information
0:08:45 creates free speech, privacy, and security concerns.
0:08:48 The platforms also deny their products
0:08:50 are harmful to children.
0:08:54 On their face, these points are valid.
0:08:57 It is more difficult to confirm age online,
0:08:58 where there’s no clerk at the counter
0:09:00 who can ask to see your driver’s license
0:09:02 and reference her face.
0:09:05 And these platforms have proven reckless
0:09:06 with personal data.
0:09:09 It’s sort of a, they’re so irresponsible,
0:09:11 but we can’t take action dilemma.
0:09:15 But these objections are not about age verification,
0:09:19 children’s rights, free speech, or privacy.
0:09:24 They are concerns about the platform company’s capabilities.
0:09:27 Their arguments boil down to the assertion
0:09:30 that these multi-billion dollar organizations
0:09:33 who’ve assembled vast pools of human capital
0:09:35 that wield god-like technology
0:09:38 can’t figure out how to build effective, efficient,
0:09:41 constitutionally compliant age verification systems
0:09:43 to protect children.
0:09:49 If this sounds like bullshit, trust your instincts.
0:09:52 This isn’t a conversation regarding the realm
0:09:55 of the possible, but the profitable.
0:10:00 When you pay an industry not to understand something,
0:10:03 it will never figure it out.
0:10:05 Just look at the tobacco industry’s inability
0:10:07 to see a link with cancer.
0:10:10 What’s more challenging?
0:10:13 Figuring out if someone is younger than 16,
0:10:16 or building a global real-time communication network
0:10:19 that stores a near-infinite amount of text, video,
0:10:23 and audio retrievable by billions of simultaneous users
0:10:26 in milliseconds with 24/7 uptime.
0:10:30 The social media giants know where you are,
0:10:33 what you’re doing, how you’re feeling,
0:10:36 and if you’re experiencing suicidal ideation.
0:10:39 But they can’t figure out your age.
0:10:42 You can’t make this shit up.
0:10:45 The platforms could design technology
0:10:47 that reliably collects sufficient information
0:10:49 to confirm a user’s age,
0:10:53 then wipes the information from its servers.
0:10:56 They could create a private or public entity
0:11:00 that processes age verification anonymously.
0:11:02 Remember the blockchain?
0:11:05 Isn’t this exactly the kind of problem
0:11:06 it was supposed to solve?
0:11:11 They could deploy AI to estimate when a user
0:11:14 is likely underage based on their online behaviors
0:11:18 and seek age verification from at-risk people.
0:11:23 If device manufacturers, or just the device OS duopoly
0:11:28 of Apple and Alphabet, were properly incentivized,
0:11:30 they could implement age verification
0:11:32 on the device itself.
0:11:34 This is what Meta says it wants
0:11:38 when it isn’t fighting age verification requirements.
0:11:42 Or, crazy idea, they could stop glorifying suicide
0:11:45 and pushing pornography to everyone.
0:11:50 The reason Zuck and other access powers
0:11:53 haven’t built age verification into their platforms
0:11:56 is it will reduce their profits,
0:11:59 because they will serve fewer ads to kids,
0:12:02 which will suppress their stock prices,
0:12:05 and the job of a public company CEO
0:12:09 is to increase the stock price.
0:12:14 Period, full stop, end of strategic plan.
0:12:18 So long as the negative impact to the stock price
0:12:21 caused by the bad PR of teen suicide and depression
0:12:25 is less than the positive impact
0:12:27 of the incremental ad revenue obtained
0:12:30 through unrestricted algorithmic manipulation
0:12:32 of those teens.
0:12:36 The rational, shareholder-driven thing to do
0:12:40 is fight age verification requirements.
0:12:42 If we want the platforms
0:12:45 to make their products safe for children,
0:12:47 we need to change the incentives,
0:12:51 force them to bear the cost of their damage,
0:12:56 internalize the externalities in economists speak.
0:13:00 There are three forces powerful enough to do this,
0:13:05 the market, plaintiff lawyers, and the government.
0:13:09 The market solution would be to let consumers decide
0:13:12 if they want to be exploited and manipulated.
0:13:16 And by consumers, I mean teenagers.
0:13:18 One big shortcoming of this approach
0:13:22 is that teenagers are idiots.
0:13:26 I have proof here as I’m raising two and I used to be one.
0:13:30 My job as their dad is to be their prefrontal cortex
0:13:32 until it shows up.
0:13:36 I told my son on a Thursday it was Thursday
0:13:39 and he disagreed.
0:13:44 The next approach is to let the platforms do whatever they want,
0:13:46 but if they harm someone,
0:13:49 let that person sue them for damages.
0:13:51 This is how we police product safety
0:13:54 in almost all contexts.
0:13:57 Did your car’s airbag explode shrapnel into your neck?
0:14:00 Sue Takata.
0:14:02 Did talcum powder give you cancer?
0:14:04 Sue J&J.
0:14:07 Did your phone burn the skin off your leg?
0:14:10 Sue Samsung.
0:14:12 People don’t like plaintiff lawyers,
0:14:14 but lawsuits are a big part of the reason
0:14:18 that more products don’t give you cancer or scald you.
0:14:22 Nobody can successfully sue social media platforms,
0:14:27 however, because of a 28-year-old law known as Section 230,
0:14:32 which gives them blanket protection against litigation.
0:14:35 I’ve written about the need to limit Section 230 before
0:14:36 and whenever I do,
0:14:41 a zombie apocalypse of free speech absolutists is unleashed.
0:14:45 The proposition remains unchanged, however.
0:14:47 If social media platforms believe
0:14:49 they’ve done everything reasonable
0:14:53 to protect children from the dangers of their product,
0:14:55 then let them prove it in court.
0:14:58 Or better yet, let the fear of tobacco
0:15:01 or asbestos-shaped litigation gorging on their profits
0:15:06 and motivate them to agegate their products.
0:15:09 Finally, the government can go after companies
0:15:12 whose products harm consumers.
0:15:15 The Federal Trade Commission has fined meta $5 billion
0:15:19 over privacy violations to no apparent effect.
0:15:23 This was perfect, except it was missing a zero.
0:15:29 For these firms, $5 billion is a nuisance, not a deterrent.
0:15:32 There’s a bill in the Senate right now,
0:15:34 the Kids Online Safety Act,
0:15:39 which would give the FTC new authority to go after platforms
0:15:42 which fail to build guardrails for kids.
0:15:44 It’s not without risk.
0:15:46 Some right-wing groups are supporting it
0:15:49 because they believe it can be used to suppress LGBT content
0:15:53 or anything else the patriarchy deems undesirable.
0:15:57 But I have more faith in Congress’s ability to refine a law
0:16:00 than I do in the social platform’s willingness
0:16:02 to change without one.
0:16:06 Until we change the incentives
0:16:09 and put the costs of these platforms where they belong
0:16:13 on the platforms themselves, they will not change.
0:16:18 Legislators trying to design agegating systems
0:16:21 or craft detailed policies for platforms
0:16:24 are playing a fool’s game.
0:16:27 The social media companies can just shoot holes
0:16:30 in every piece of legislation, fund endless lawsuits,
0:16:34 and deploy their armies of lobbyists and faux heat shields,
0:16:38 lean in, all the while making their systems
0:16:41 ever more addictive and exploitative.
0:16:44 Or maybe we have it wrong
0:16:47 and we should let our kids drink, drive,
0:16:50 and join the military at 12.
0:16:52 After slitting their wrists,
0:16:55 survivors often get tattoos to cover the scars.
0:17:00 Maybe teens should skip social media and just get tattoos.
0:17:04 I warned you, dark.
0:17:09 Life is so rich.
0:17:13 (gentle music)
0:17:16 (gentle music)
0:17:18 (soft music)
0:17:28 [BLANK_AUDIO]

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0:01:14 Episode 306, 06 is the air echo
0:01:16 belonging to the Canadian province of Saskatchewan.
0:01:20 In 1906, Finland became the first European country
0:01:22 to give women the right to vote.
0:01:25 I actually sexually identify as Canadian.
0:01:29 I’m asexual, got it?
0:01:30 Sort of threading the needle
0:01:32 between dad jokes and profanity.
0:01:36 Go, go, go!
0:01:47 Welcome to the 306th episode of the PropG pod.
0:01:49 In today’s episode, we speak with Jesse Itzler,
0:01:52 a serial entrepreneur, a New York Times bestselling author,
0:01:57 part owner of the Atlanta Hawks and an ultra marathon runner.
0:01:59 We discussed with Jesse his career journey,
0:02:00 his approach to entrepreneurship,
0:02:03 including how it aligns with his fitness journey
0:02:04 and the strategies he implements
0:02:06 to maintain balance in his life.
0:02:08 I’ve seen this guy everywhere on TikTok
0:02:11 ’cause he has sort of a nice vibe
0:02:16 that sort of melds his professional and personal life.
0:02:18 He’s kind of an attractive person.
0:02:20 You’re sort of drawn to him.
0:02:21 Okay, what’s happening?
0:02:24 I’m back in London after a week in the south of France.
0:02:28 That’s right, it is about 75 degrees.
0:02:31 By the way, there’s no air conditioning in the UK.
0:02:32 Did you know that?
0:02:33 They don’t believe in air conditioning.
0:02:35 We do have indoor plumbing, I’ll give them that.
0:02:37 There’s no fucking air conditioning.
0:02:38 I get up last night ’cause I’m hot
0:02:41 ’cause it’s gotten up to a sweltering 72 degrees here.
0:02:42 I’m like, I’m a little bit warm.
0:02:44 I’m gonna turn on the air conditioning.
0:02:45 I’m looking for the air conditioning.
0:02:46 And I was looking for a long time.
0:02:49 Why? Because there is no air conditioning.
0:02:50 What’s with that?
0:02:52 Anyways, moving on to some news.
0:02:54 Apple became the first US company
0:02:56 to be charged for violating the Digital Markets Act,
0:02:59 which EU regulators put in place back in 2022
0:03:02 to prevent online gatekeepers, error quotes,
0:03:04 from starching out competitors.
0:03:05 It’s really interesting in particular,
0:03:06 in this particular instance,
0:03:07 well, I think it’s interesting.
0:03:09 Maybe you don’t, maybe you don’t.
0:03:10 Maybe you’re asexual.
0:03:12 Anyways, in this particular instance,
0:03:14 the regulators determined that Apple makes it too hard
0:03:16 for app developers to steer consumers
0:03:17 to alternative offerings.
0:03:20 Well, you just figured that out under the Digital Marketing Act,
0:03:23 fines can be up to get this 10% of gross revenue.
0:03:25 For Apple, that would be up to 38 billion
0:03:27 based on last year’s revenue.
0:03:29 Okay, let me get this.
0:03:31 Apple makes $380 billion.
0:03:33 How is that even possible?
0:03:34 How is that even possible?
0:03:38 I sold my last company for 160 million.
0:03:40 It was doing 20 million in revenue.
0:03:43 It literally took an act of God
0:03:44 and me sacrificing my health
0:03:46 in every relationship I had
0:03:48 to get to 20 million in revenue.
0:03:51 These guys have gotten a $380 billion in revenue.
0:03:54 What are they doing selling like a baby’s kidney?
0:03:56 What on earth are they doing over there?
0:03:58 $380 million.
0:03:59 Anyways, because of this charge,
0:04:02 Apple says will not roll out Apple intelligence
0:04:03 in the EU this year.
0:04:05 Whoa!
0:04:08 They’re taking their Apple and they’re going home.
0:04:11 And that’s the problem with this type of regulation
0:04:14 across capitalist democratic societies
0:04:17 or G20 nations when we don’t have a collective action.
0:04:20 And it’s the same problem that haunts parents
0:04:22 with their teens with respect to depression
0:04:24 and social media.
0:04:25 People who say, well, can’t you just take away
0:04:27 the social media of the phone?
0:04:28 Clearly don’t have children.
0:04:31 And two, there’s a collective action problem.
0:04:33 And that is if your kid’s not on snap
0:04:36 and all the other eighth graders are on snap,
0:04:38 that kid actually is more depressed
0:04:41 because he or she is ostracized or feels isolated.
0:04:44 And it’s a bit of the same thing with regulation.
0:04:47 And that is it just strikes me is so crazy
0:04:49 that we wouldn’t get together with my idol,
0:04:51 Marguerite Vestillard.
0:04:52 By the way, quick story.
0:04:53 You’re a competitive commissioner.
0:04:55 You’re a competitiveness commissioner.
0:04:57 Was on a train from, I was on the Assela.
0:04:58 I never take the Assela.
0:05:01 I think it’s dramatically unimpressive.
0:05:02 I’m on a lot of trains in Europe.
0:05:05 And then I get on the Assela and I think,
0:05:06 well, maybe we are going to,
0:05:08 maybe it is the peak of our, I don’t know,
0:05:10 society or peak America.
0:05:12 Anyway, and I saw this woman knitting
0:05:14 and I’m like, that looks like Marguerite Vestillard.
0:05:16 And it was sitting there meeting
0:05:19 in between breaking up Apple and Big Tech.
0:05:20 And I went up to her and said, could I have a picture?
0:05:21 And she was so friendly.
0:05:24 I don’t think she has a lot of fans in the US,
0:05:25 but I like her.
0:05:28 I think she’s unafraid, super smart, does her homework.
0:05:31 Anyways, an example of a great regulator.
0:05:35 But they’re saying they’re not going to roll out intelligence.
0:05:36 So they’re going to take it home.
0:05:37 And the problem with not having collective action
0:05:42 or joint regulation is that these Big Tech companies
0:05:43 as a group have now become more powerful
0:05:46 than any specific country, maybe even the European Union.
0:05:47 We’ll see, we’ll see.
0:05:49 And they’re not afraid to say, no,
0:05:52 this is more than them saying, we don’t want to comply.
0:05:54 They’re saying, if you start regulating us,
0:05:57 we don’t want to play ball.
0:05:59 And I think that where we would be best served
0:06:03 is if we had some sort of multilateral cooperation
0:06:04 around these things.
0:06:05 Otherwise it’s just a race to the bottom.
0:06:07 And I wonder if this is sort of sets off a race
0:06:09 where a bunch of Big Tech companies
0:06:11 are not going to be afraid following Apple’s lead to say,
0:06:15 sorry, we’re not playing your super regulation concern
0:06:18 for the Commonwealth, you know, monopoly-powered games.
0:06:20 Microsoft is also facing charges
0:06:21 for anti-competitive behavior.
0:06:24 Regulators do not like that the firm bundles
0:06:26 its Teams app with the Office suite.
0:06:29 Microsoft hasn’t seen this type of antitrust
0:06:30 in more than a decade.
0:06:34 So, okay, what would be the biggest tax cut in history
0:06:37 if the US and China kissed and made up?
0:06:41 China has the world’s best supply chain still
0:06:44 India’s coming up, Vietnam, Mexico, all pretty strong.
0:06:47 China, the gangster supply chain, right?
0:06:50 Flexible, people work so hard, quick story, quick story.
0:06:52 I used to run a company called L2C above,
0:06:55 the company that I’m basically killed
0:06:58 and pillaged to get to 20 million in revenue for.
0:07:02 We did a decent amount of business in China.
0:07:03 We didn’t work for Chinese companies.
0:07:04 I found Chinese companies
0:07:07 don’t want to pay for anything, they’ll figure.
0:07:09 But American companies looking to get into China
0:07:11 would hire us to look at Chinese data
0:07:13 around their digital footprint.
0:07:15 And one of my clients, I think it was Estee Lauder China,
0:07:17 they made a big bet on China.
0:07:20 And I was doing a swing through China to do events.
0:07:23 And I get there like 11 p.m. on a Saturday night.
0:07:26 I don’t know, I’m so bass-acquards.
0:07:28 And I called the office of the head of,
0:07:30 I think it was Estee Lauder China.
0:07:33 And to tell him, I’ll see you Monday at 9 a.m.
0:07:35 It’s referred or forwarded to a cell phone.
0:07:37 He picks it up and I said, I’m so sorry.
0:07:39 It’s Saturday night, 11 p.m. I didn’t mean to wake you.
0:07:39 And he said, where are you?
0:07:40 And I said, I forgot what hotel I was on.
0:07:41 I think it was a higher range seat.
0:07:44 That’s a sky lobby that’s like 1,100 floors in the sky.
0:07:45 And he said, oh, you’re there?
0:07:46 He said, are you awake?
0:07:47 I’m like, yeah, I’m awake.
0:07:48 And he said, well, I’ll come over right now.
0:07:49 That’s fucking China.
0:07:50 That’s when I’m like, oh God,
0:07:53 these people take themselves pretty seriously.
0:07:55 You call the head of Estee Lauder China.
0:07:58 And he comes and meets you at 11 p.m. on Saturdays
0:08:00 so we can get a jump on his Monday morning.
0:08:01 Think about that.
0:08:05 Anyway, China takes themselves very seriously.
0:08:07 And the biggest tax cut in the world
0:08:10 would be if the supply chain and the innovation
0:08:13 and IP of the U.S. got back together.
0:08:14 What do we have?
0:08:14 We have an inflation problem.
0:08:15 What do they have?
0:08:17 An unemployment and growth problem, boom.
0:08:20 Let’s kiss and make up, ladies and gentlemen.
0:08:23 And the more we get along and the more people
0:08:25 who go back and forth between the China and the U.S.,
0:08:28 the less likely we are to go to war with each other.
0:08:30 The less likely they are, I believe, to invade Taiwan.
0:08:33 The less likely we are to start shooting
0:08:36 or entering into a hot war with their Navy
0:08:38 if and when they invade Taiwan
0:08:39 if we’re all making a lot of money
0:08:41 and interacting and speaking to each other.
0:08:43 The second biggest tax cut in history,
0:08:45 the second biggest tax cut,
0:08:49 would be if we invested 10, 20, $30 billion,
0:08:51 gave it to Lena Kahn and Jonathan Canter.
0:08:56 And basically, totally overfunded the DOJ and the FTC
0:09:00 and went on a breakup lullapalooza.
0:09:01 Why?
0:09:04 Everything from chicken to home renovations
0:09:09 to beef to cereal to confections to search engines
0:09:13 to social media is controlled by a small number of companies.
0:09:15 And what happens to an industry
0:09:16 when it becomes too concentrated,
0:09:18 they learn that they don’t have to make great products.
0:09:21 They can just raise prices and there aren’t that many options.
0:09:23 And then, boom, what happens?
0:09:23 Prices go up.
0:09:25 And the traditional means of establishing
0:09:28 anti-competitive behavior is to look at prices.
0:09:30 But how do you establish those metrics around companies
0:09:31 that offer their products for free?
0:09:35 Well, what happens is Amazon becomes a monopsony.
0:09:37 And that is if you want to be on the Amazon platform
0:09:40 and have access to 50 cents on the e-commerce dollar,
0:09:41 it’s probably more like 70,
0:09:43 if you take out groceries and gasoline,
0:09:44 you have to be on their platform.
0:09:45 And what do you know?
0:09:47 The fees they charge their retailers
0:09:50 on the third party platform have grown dramatically,
0:09:53 I think from something like 24 to 40% in the last decade.
0:09:54 Okay, that is monopoly abuse.
0:09:55 And what do you know?
0:09:56 What do you know?
0:09:58 How would you describe the Apple App Store?
0:09:59 Provide security, technology.
0:10:01 You know that the people on the other end
0:10:03 are gonna provide a service in exchange for money,
0:10:05 secure platform, communicate.
0:10:06 Oh, wait, it’s a credit card company.
0:10:07 What do we need?
0:10:08 What do we need?
0:10:10 We need that Apple App Store not to be charging 30%,
0:10:14 but to be charging two or 3% like every credit card company,
0:10:16 but they get away with 30%.
0:10:17 Why?
0:10:17 Why?
0:10:18 Because they have a monopoly
0:10:20 on essentially people who spend money online.
0:10:23 This would be like you own the train tracks
0:10:26 and you own the trains and you see
0:10:28 where apparel is being dropped off.
0:10:31 And you use that data to go into your own apparel business
0:10:33 and by the way, you don’t charge your own owned
0:10:36 and operated apparel company any transit fees
0:10:37 and they can charge lower fees
0:10:38 and no one can compete with them
0:10:41 because you start a line of athletic wear or yoga wear
0:10:44 and it costs half as much as Lululemon
0:10:46 and you get to see where Lululemon is selling
0:10:48 and you have your store called Apple Lemon
0:10:49 and you charge half the price
0:10:50 and you can still make money
0:10:52 and you just wait until Lululemon dies
0:10:55 and perhaps Lululemon’s yoga pants
0:10:56 don’t get there as quickly as yours do.
0:10:58 You see, you get my drift.
0:10:59 You get my drift.
0:11:04 So the fastest way to lower taxes on consumers globally
0:11:07 would be to go in to the three or four biggest companies
0:11:09 in every major category and break them up
0:11:11 and oxygenate the economy.
0:11:13 Similar to when we broke up AT&T,
0:11:14 what were the arguments?
0:11:16 Well, we need to be big so we can invest in,
0:11:18 in phone lines and capex.
0:11:19 Okay, we’ve heard that before.
0:11:21 We’re good people and it’s a good brand
0:11:23 and we’re gonna buy off a bunch of politicians.
0:11:25 Boom, they go in, they break it up.
0:11:27 Seven baby bells, each of those companies
0:11:30 worth more than the original AT&T within 10 or 12 years.
0:11:32 Oh, and by the way, what did we have?
0:11:33 We had at least tremendous innovation
0:11:34 ’cause guess what?
0:11:36 We had fiber, we had data,
0:11:39 we had optics, all lying fallow at Bell Labs
0:11:43 and they didn’t wanna compete with their own technology.
0:11:47 This would be the most dramatic tax cut in history,
0:11:48 second only to China.
0:11:51 And that is every company would begin competing
0:11:54 for consumers, lowering their rents
0:11:56 on companies, consumers and parents.
0:11:58 You’d have more innovation unlock.
0:11:59 Look what happened at Google.
0:12:00 Google basically invented AI
0:12:01 and what do you know?
0:12:04 They were sitting on AI until ChatGPT
0:12:06 or OpenAI or Microsoft AI came in
0:12:09 and said this is a real marketplace
0:12:10 and basically scared the shit out of Google
0:12:12 who was sitting on their hands, why?
0:12:15 ‘Cause they didn’t wanna challenge search.
0:12:17 So they kept it kind of on the low down.
0:12:19 They didn’t really go hard at it and that’s what happens.
0:12:21 There’s a ton of technologies and innovation
0:12:24 waiting to be unleashed if we break these companies up.
0:12:27 The EU is taking action ahead of us
0:12:29 recognizing they get the majority of the downside.
0:12:30 They get all the teen depression,
0:12:31 the weaponization of their elections,
0:12:34 the income inequality, the monopoly abuse
0:12:35 but they get a fraction of the upside.
0:12:37 There aren’t that many hospital wings
0:12:38 or universities named after Google
0:12:40 or Facebook billionaires like fuck that.
0:12:42 That’s stiff in their backbone
0:12:44 and they are starting to go gangster here
0:12:45 but if we don’t have collective action
0:12:47 and cross border cooperation,
0:12:48 it’s gonna be a race to the bottom
0:12:51 and we’re gonna end up in an even worse place
0:12:52 with more depressed kids.
0:12:55 A small number of people who make a shit ton of money
0:12:56 but a middle class that is struggling,
0:12:59 labor that continues to see their wages erode
0:13:02 and products that never recognize their full potential
0:13:03 ’cause they’re totally focused
0:13:07 on monopoly abuses of strategy as opposed to innovation.
0:13:09 Apple was already fined $2 billion back in March
0:13:11 for its domination in the music streaming market.
0:13:13 That’s fine and needs another zero.
0:13:14 These fines have become meaningless.
0:13:17 $2 billion is nothing, nothing for Apple.
0:13:21 Apple will lose or gain $2 billion in market cap
0:13:24 in the next 10 minutes in the marketplace.
0:13:26 We need to add a zero to all these fines.
0:13:29 We need to go on a breakup Lollapalooza.
0:13:32 We’ll be right back for our conversation
0:13:34 with Jesse Itzler.
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0:16:58 (upbeat music)
0:17:05 – Welcome back.
0:17:07 Here’s our conversation with Jesse Itzler,
0:17:09 a serial entrepreneur, bestselling author,
0:17:10 and ultra marathon runner.
0:17:14 Jesse, where does this podcast find you?
0:17:16 – Atlanta, Georgia, where I live.
0:17:18 – Atlanta, nice.
0:17:20 So let’s bust right into it.
0:17:22 Give us your kind of origin story, Jesse.
0:17:25 Walk us through your background
0:17:27 and how you ended up doing what you’ve done.
0:17:30 – I’ve had a very unconventional journey
0:17:31 and worn a lot of different hats.
0:17:34 I started out in the music business
0:17:35 right out of college.
0:17:37 I went to school in DC at American University.
0:17:40 I was signed to a record label called Delicious Final.
0:17:43 And that didn’t go great for me.
0:17:45 I ended up getting dropped from the label
0:17:47 and I started doing theme songs for sports teams
0:17:51 like the NYX theme song, which is called Go New York Go.
0:17:52 Bunch of other teams.
0:17:55 And ultimately started a music marketing company
0:17:57 that I sold to a public company.
0:18:00 And then I’m a big runner.
0:18:03 I’ve done a lot of long distance ultra races.
0:18:05 And when I was training for a 100 mile race,
0:18:10 I discovered coconut water in 2006, 2007.
0:18:13 I ended up partnering with a coconut water company
0:18:17 called Zico, which we sold to Coke, Coca Cola.
0:18:20 And then just had a bunch of wrote a book, had four kids,
0:18:24 got married, moved from New York to Atlanta,
0:18:26 and really just followed things that I love to do
0:18:28 and launched a bunch of businesses.
0:18:29 Some worked and some didn’t.
0:18:31 And here I am.
0:18:33 – So let’s go through the businesses.
0:18:36 What was sort of your approach to starting businesses?
0:18:38 Which ones worked, which ones didn’t?
0:18:40 And if you could draw a line through
0:18:42 or try and find signal from the noise
0:18:44 in terms of why companies worked or didn’t work,
0:18:46 what would that signal be?
0:18:48 – Well, jumping right to that point,
0:18:49 I think at the end of the day,
0:18:52 usually for me, it’s come down to management.
0:18:55 And that’s not hiring people that could take my idea
0:18:57 and bring it to fruition.
0:18:59 I think the best idea is that they don’t have good leaders
0:19:02 and good managers will struggle.
0:19:06 And, you know, Scott, I really enjoyed my 20s, man.
0:19:09 I tried a lot of different things.
0:19:13 I slept on 18 different couches from 18 to 22.
0:19:14 Different friends putting me up,
0:19:16 going couch to couch, trying different businesses.
0:19:20 I sold carrot and celery sticks door to door.
0:19:21 I was a kiddie pool attendant.
0:19:23 I cleaned pools.
0:19:25 I sold meat, chicken, door to door.
0:19:27 I just tried so many different things.
0:19:31 When I was 28 years old, I was a guest on a private jet.
0:19:33 And when I walked onto the private jet,
0:19:35 it was like the scene in the Wizard of Oz
0:19:38 when everything in life goes from black and light to color.
0:19:42 And I was like, people fly like this, this is insane.
0:19:43 I wanna fly like this.
0:19:45 And that’s how we got the idea
0:19:47 to start this company called Marquis Jet.
0:19:50 I think a lot of the businesses that I’ve been involved with,
0:19:54 some which worked, many more which didn’t work,
0:19:55 entrepreneurs can do two things.
0:19:59 They can make something better or they create something new.
0:20:02 And all the businesses that I’ve been involved with
0:20:05 were a function of just identifying things
0:20:07 that fit one of those two categories.
0:20:09 You’re like, wow, like I’m a runner.
0:20:11 I would love, what’s the natural healthy way to get a lecture?
0:20:15 Like coconut water emerged through necessity and need.
0:20:17 And just keeping my eyes open
0:20:22 for things that would make my life easier or better.
0:20:25 And that’s how those ideas popped into my head.
0:20:27 – So talk about Marquis Jet.
0:20:29 What gave you the vision?
0:20:32 I mean, it’s not easy to start a, explain the concept,
0:20:34 how it differentiated from other fractional companies
0:20:35 who are owning a plane.
0:20:37 And what was your niche in the marketplace?
0:20:39 Marquis, who kind of what happened there?
0:20:42 – Yeah, well, at the time that we started this company,
0:20:46 which was around the year 2000, 99, 2000,
0:20:50 there were really only three ways to fly privately.
0:20:51 You could buy your own airplane,
0:20:53 which was incredibly expensive.
0:20:57 You could charter a plane with a lot of inconsistencies.
0:20:58 Who’s flying the airplane?
0:20:59 How old is the airplane?
0:21:01 Who’s managing the airplane?
0:21:03 Or you could buy a fraction of an airplane,
0:21:06 which also is a long-term commitment and a lot of money.
0:21:08 That’s what NetJets was doing and Flex Jet
0:21:11 and other fractional jet companies.
0:21:14 And I couldn’t afford any of those options.
0:21:15 And they weren’t realistic for me.
0:21:17 I wanted to take two or three flights a year
0:21:21 with some friends, treat my parents, maybe a business trip.
0:21:24 So our idea was a 25 hour, basically debit card.
0:21:28 You prepaid for 25 hours, put like 50 or 100 grand down
0:21:29 for 25 hours.
0:21:32 And if you fly too, you have 23 hours left.
0:21:33 You don’t have to own the airplane.
0:21:36 The plane was available on short notice.
0:21:39 And you’re right, we had no aviation experience
0:21:42 and we had no airplanes and we had no money.
0:21:45 But we went to the 800 pound gorilla, NetJets,
0:21:49 which had 650 planes, the largest private jet fleet
0:21:51 in the world and owned by Warren Buffet.
0:21:56 And we pitched them this idea of a 25 hour jet card.
0:21:58 And ’cause we needed airplanes.
0:22:01 And the CEO would say, “I’m truly through my partner
0:22:03 and I out of that meeting in 12 minutes.”
0:22:05 And literally said, “If you think I’m giving
0:22:08 two 28 year old kids who probably didn’t break 1,000
0:22:10 on their SATs access to my planes,
0:22:12 that’s not gonna happen.”
0:22:13 And kicked us out.
0:22:16 And the president grabbed us and said,
0:22:18 “Wait a second, I think there’s something here.
0:22:21 I want you guys to come back and repitch this next week.
0:22:22 I’m gonna set up a follow up meeting.
0:22:24 I want to hear more.”
0:22:28 We came back a week later and we brought
0:22:30 in our own focus group.
0:22:33 And we literally set up eight chairs in the board room
0:22:35 and one by one, eight people,
0:22:38 a powerful real estate mogul from New York,
0:22:39 a sports agent.
0:22:41 They stood up and said they would never buy a fraction,
0:22:44 but they would buy a 25 hour jet card.
0:22:48 And ultimately we got a deal to use their planes
0:22:51 and put our program under the NetJet fleet.
0:22:56 So our niche was catering to an audience
0:22:59 that couldn’t afford to buy their own plane.
0:23:03 We made private aviation more affordable to the masses
0:23:04 and it worked.
0:23:06 – NetJets, I would think would want to do it
0:23:08 in hopes that they could get people addicted to this
0:23:10 and then move them up to fractional.
0:23:11 Is that accurate?
0:23:13 – That’s 100% accurate.
0:23:14 We were a marketing arm and yes,
0:23:19 we were a farm system for their larger fractional program.
0:23:22 – And so tell me about the industry now
0:23:24 in terms of fractional, how would you differentiate
0:23:26 between kind of give us a layer of the land
0:23:28 and how the market, that business has evolved
0:23:31 and eventually Berksha slash NetJets
0:23:33 bought you out, correct?
0:23:36 – Yeah, so I’ve been at it for almost 13 years now.
0:23:38 So I don’t follow the industry super close.
0:23:40 I’m just a customer.
0:23:41 But I know a lot, it’s really,
0:23:45 it’s a really difficult capital intensive business, Scott.
0:23:48 I think when we started, there were like 50 companies
0:23:50 that put a flag in the ground that said
0:23:51 they were in the private jet space
0:23:53 and like two were profitable.
0:23:56 It’s a really hard business to survive in.
0:24:01 NetJets had the luxury of being backed by Berkshire.
0:24:04 So they built an incredible infrastructure.
0:24:09 But now, 13 years later, I’m not 100% sure how it’s evolved,
0:24:11 but it’s a lot of the same.
0:24:14 It’s still packed by your own plane,
0:24:16 by a fraction of a plane charter
0:24:19 or some kind of card or one-off program.
0:24:23 – And give us the journey around coconut water.
0:24:25 – So my model’s, I’m not a great operator.
0:24:28 I know what my weakness is, I’m a terrible operator,
0:24:31 a much better marketer, idea guy.
0:24:34 And following piggybacking off of that model,
0:24:36 we’re like, wow, I can come up with an idea
0:24:40 and partner with a company that has an expertise
0:24:42 and I could just be a marketing arm for them.
0:24:46 I went to Coca-Cola with this idea for coconut water
0:24:48 and a PowerPoint.
0:24:51 And so I wanna get to the coconut water business.
0:24:56 At this time, it was a very, very small category and beverage.
0:25:00 And they said, we see this as an evolving area,
0:25:03 but we don’t buy PowerPoints.
0:25:06 But if you find an existing company out there
0:25:09 that’s proven that they can source the product,
0:25:12 sell the product, they’re on the shelves, et cetera,
0:25:14 and you come in to help market it,
0:25:16 we’d love to be in business with you.
0:25:19 So we went to a company called Zico Coconut Water
0:25:21 that was doing about $2 or $3 million,
0:25:24 maybe a little bit more in sales at the time.
0:25:25 And we did a three-way deal.
0:25:30 My group, my company, Zico, which existed in Coca-Cola,
0:25:33 and Coke had an option to buy 100% of the company
0:25:34 down the road.
0:25:37 And two years later, they executed that option.
0:25:40 So we got it really hot, really fast.
0:25:43 And we did that through PR,
0:25:47 through we had a lot of celebrity investors.
0:25:50 The old model in beverage was,
0:25:51 we’re gonna pay people as endorsers,
0:25:55 but the customer’s consumer’s pretty smart now.
0:25:56 And they see that.
0:25:58 Our model was, write us a check,
0:26:01 be an investor, Mr. and Mrs. Celebrity,
0:26:06 and help us promote it as an owner of the company.
0:26:07 And that model worked.
0:26:10 And now a lot of companies have followed suit
0:26:12 off of that model.
0:26:13 – I like the way that you define
0:26:15 or you view success and luck.
0:26:17 What has been your approach to putting yourself
0:26:20 in situations where luck can find you?
0:26:22 – Well, I think as an entrepreneur,
0:26:24 a big part of it is luck.
0:26:26 And I’ve been super lucky
0:26:29 and probably way more lucky than good.
0:26:31 But I put myself in situations
0:26:33 where I can attract that luck.
0:26:35 I used to come home, Scott, from like,
0:26:37 I walk into Marquis Jet and I’d be like,
0:26:38 I got a sale last night.
0:26:40 We had a bell, I would ring the bell.
0:26:41 They’d be like, what do you mean?
0:26:44 You had the bar, same bar I was at.
0:26:46 I’m like, yeah, but you left it 11 o’clock.
0:26:50 I stayed till two and I got the sale.
0:26:50 Oh, you’re so lucky.
0:26:53 The guy came, I was, I’m not lucky.
0:26:55 I put myself in that situation.
0:26:57 You know, luck doesn’t happen Sunday night
0:27:00 watching the Kardashians on your couch.
0:27:02 It happens when you put yourself in an environment
0:27:06 where the universe can reward you for being there.
0:27:07 And then you have to be good at what you do
0:27:09 and take advantage of it.
0:27:13 So my 20s and 30s were built around
0:27:16 putting myself in environments where I could get lucky.
0:27:19 – So you do these ultra-man competitions
0:27:22 which are incredible feats of endurance.
0:27:26 And I rode crew and I think one of the things
0:27:30 that’s put me in a position of success is that,
0:27:32 you know, as I’m sure, I can’t even,
0:27:33 I can’t even imagine what it’s like to run
0:27:35 these distances or swim these distances.
0:27:39 But in crew, it’s basically who can endure the most pain.
0:27:41 I mean, there’s some technique, there’s some strength,
0:27:43 there’s some fitness, but it’s mostly an exercise
0:27:46 and who’s willing to endure the most pain.
0:27:47 And I’ve always thought that’s an enormous advantage
0:27:50 for an entrepreneur that when you think things
0:27:53 couldn’t get any worse and you just can’t handle it anymore,
0:27:56 what you learn, I would imagine in the ultra-man
0:27:58 and what I learned at crew is that when you think that,
0:28:00 it means you’re about a third of the way to your limit.
0:28:03 And it always gave me a sense of comfort and confidence
0:28:04 that I could keep going.
0:28:07 I’m curious what you think the relationship is
0:28:09 between kind of what I’ll call extreme fitness
0:28:11 or extreme sports in entrepreneurship.
0:28:16 – In 2006, I ran my first 100 mile race.
0:28:18 And when I came back after that race,
0:28:20 I got my office together and I said,
0:28:21 “Double the business plan.”
0:28:25 The correlation, I mean, when you do something like that,
0:28:28 you realize that the limits that we put on ourself
0:28:31 are pretty much self-imposed.
0:28:34 And we have so much more in the tank than we thought we could.
0:28:37 I mean, I started out running two miles, that was my goal.
0:28:40 And nothing changed on my body.
0:28:44 I’m still the same leg, same build.
0:28:46 I’m not super strong, nothing changed.
0:28:48 The only thing that changed is,
0:28:50 I saw someone run a 100 mile race.
0:28:54 I went to watch a 100 mile race in 2006.
0:28:56 And there weren’t a bunch of supermen
0:28:58 that started at the starting line.
0:29:01 People, in fact, weren’t even that physically impressive.
0:29:04 But what happened was they didn’t stop.
0:29:07 They just didn’t stop.
0:29:11 And I was like, oh, wow, this is a test of will.
0:29:12 This is just will.
0:29:13 Sign me up for this race
0:29:16 and let me see how much will I have.
0:29:18 And when I did the first 100 mile race,
0:29:21 it changed everything in my life
0:29:23 as it relates to entrepreneurship.
0:29:27 Now, for starters, we talked about Marquis Jet briefly,
0:29:28 but if they would have said to me,
0:29:30 I was a kiddie pool attendant
0:29:32 five years before I started Marquis Jet.
0:29:35 I worked at a freaking kiddie pool, man.
0:29:37 And five years later,
0:29:40 we had this company that’s doing five billion in sales.
0:29:42 And if they would have said to me,
0:29:43 when I started Marquis Jet,
0:29:45 you need Department of Transportation approval.
0:29:47 You can need FAA approval.
0:29:49 You can build a sales team, raise money.
0:29:51 I would have been like, well, I said,
0:29:52 what’s the first thing, Scott?
0:29:54 You said I needed Department of Transportation approval.
0:29:57 There’s gotta be a lawyer that does that.
0:29:58 Let me find that guy.
0:30:00 Okay, we got, what’s the second thing I need?
0:30:01 FAA approval.
0:30:04 And I broke it down into digestible bites.
0:30:08 It’s the same thing with 100 mile race or the Ultraman,
0:30:10 or even I’m sure when you race crew,
0:30:14 going like flagpole to flagpole or tree to tree,
0:30:16 you know, you break it down into digestible bites.
0:30:18 So there’s a lot of similarities
0:30:22 between how you approach a race like that
0:30:24 and how you approach a startup business,
0:30:27 especially if you have no entrepreneurial experience,
0:30:29 my dad owned the plumbing supply house.
0:30:31 We never talked about business.
0:30:32 There was no, you know,
0:30:33 I had to kind of help figure it out
0:30:36 and navigate it on my own,
0:30:38 which actually became a blessing
0:30:40 because it meant that I would do things differently
0:30:40 than other people.
0:30:43 We’ll be right back.
0:30:50 Support for Prop G comes from Greenlight.
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0:30:53 you hope they spend it on enriching things
0:30:56 like a new hobby or better yet, save it.
0:30:58 And you pray they’re not following their last dollar
0:30:59 and to say video game skins,
0:31:02 but no matter what, kids will never truly learn
0:31:03 the value of the dollar
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0:33:58 – You talk about the buckets of rich that you believe in,
0:34:00 and I love that term, buckets of rich,
0:34:02 time rich, socially rich, spiritually rich,
0:34:03 intellectually rich, purposefully rich,
0:34:05 physically rich, and adventure rich.
0:34:07 Can you walk us through those?
0:34:10 – Yeah, there’s an old acronym that they use
0:34:12 as my parents were getting older.
0:34:15 I did a lot of research around senior facilities.
0:34:18 I’m going to send my parents to a senior facility
0:34:20 and I stumbled upon an acronym
0:34:23 that one of the centers used
0:34:25 called SIPs, and it stands for
0:34:30 Social, Intellectual, Physical, Purposeful, and Spiritual.
0:34:32 And what struck me is so interesting about that
0:34:35 is that they didn’t talk about Instagram followers.
0:34:36 How many do you have?
0:34:39 A watch, the watch you wear.
0:34:42 But financial wasn’t even a category.
0:34:44 And they’re grading your overall,
0:34:47 the most important thing, your health,
0:34:49 your wellness, your happiness.
0:34:52 So I started to think about
0:34:57 my own circle of friends and people
0:35:01 that are wealthy and even myself.
0:35:06 I’m like, what are those buckets that I value the most?
0:35:09 And they’re the ones that you just said.
0:35:10 You can have all the money in the world,
0:35:12 but if you’re not time rich,
0:35:16 having the freedom to do what you wanna do,
0:35:18 or spiritually rich,
0:35:21 then there’s an emptiness to your wealth.
0:35:24 So that’s sort of how I started to think about it.
0:35:28 I invest a lot in how I spend my time,
0:35:31 how I plan, how I think about time.
0:35:33 Being as good as I can be in the buckets
0:35:36 that matter the most to me,
0:35:41 is a really good way for me to measure my success.
0:35:44 My family, I have four kids, my friends,
0:35:47 my relations, my business, my wellness, et cetera.
0:35:49 How am I doing in those buckets?
0:35:51 What do you think about, I’ve always,
0:35:53 I like to say you can have it all,
0:35:54 you just can’t have it all at once,
0:35:56 because the time bucket,
0:35:58 I have found, or at least I’ve found,
0:36:02 that if I wanted to have the money bucket full at some point,
0:36:04 I’d have to sacrifice the time bucket,
0:36:06 that I’d have to pretty much go all in on work
0:36:08 for a certain amount of time.
0:36:09 That certain buckets,
0:36:11 we’re just gonna know what the term is,
0:36:13 run especially full or especially empty.
0:36:18 I was never able to really strike a balance
0:36:21 as a younger man and achieve any level of success.
0:36:22 I know those people existed.
0:36:23 I wasn’t one of them.
0:36:26 I found I had to go all in on something,
0:36:27 or it just didn’t work.
0:36:29 And it came at a price.
0:36:31 It came at a price of my relationships,
0:36:33 I wasn’t always worked out,
0:36:35 but I probably wasn’t as fit as I could have been
0:36:37 or healthy as I could have been.
0:36:39 But now I have a lot of that balance.
0:36:41 I have a thesis and that is young people
0:36:42 think they can have it all.
0:36:44 And I just don’t think that’s true.
0:36:47 What are your thoughts about trying to manage balance
0:36:50 at a young age and all of these different buckets
0:36:54 that sometimes are in opposition with each other?
0:36:56 – Well, it’s an individual decision.
0:36:59 I think it varies depending,
0:37:01 in my opinion, based on your age.
0:37:04 So I think that I believe
0:37:06 it was important to have your 20s.
0:37:09 So a lot of my friends go from 20 to 50 like that
0:37:11 because they were working on Wall Street
0:37:13 in front of a computer all day.
0:37:17 They were sacrificing life, they gave up their 20s.
0:37:19 You know, that your 20s are a time
0:37:21 to try as many things as you can
0:37:24 and see what you like to do and see what you’re good at.
0:37:24 And then, you know,
0:37:27 and then master it in your 30s and get rich in your 40s.
0:37:30 You’re gonna make five to 10 times as much money,
0:37:32 most people in their 40s and 50s
0:37:33 than you will in your 20s.
0:37:35 There’s exceptions to that pool,
0:37:36 but because you’re gonna be smarter,
0:37:38 you’re gonna know more people,
0:37:39 you’re gonna be better at what you do.
0:37:43 And I think a lot of people see on social media,
0:37:46 people getting wealthy quickly and think like,
0:37:49 well, that’s their story, you know,
0:37:51 and you can’t compare yourself to that.
0:37:52 There are people that do that.
0:37:55 But I remember going to Coca-Cola in my 20s
0:37:58 on the Ziko meeting and the president of Coke said to me,
0:38:00 it’s gonna take eight years to build this brand.
0:38:03 It takes eight years to build a brand in this country.
0:38:05 I always remembered that
0:38:07 and it’s gotten sped up a little now
0:38:10 with the internet and everything, but it takes time.
0:38:14 So I think, look, balance is tough.
0:38:16 You always go, I wasn’t in balance
0:38:19 when I ran my ultra marathon, I was training.
0:38:21 You go in and out of balance,
0:38:24 but that sacrifice and what you’re willing to give up
0:38:25 is important to remember.
0:38:27 You don’t get your 20s back, you don’t get your 30s back,
0:38:30 you don’t get your kids growing up back.
0:38:34 I have four kids now that are all under the age of 14.
0:38:36 So I’m going through this right now.
0:38:37 How much time do I want to spend at work
0:38:40 and how much time do I want to spend with my kids?
0:38:43 What do you, do you have any sort of guideposts as a dad
0:38:46 to try and make sure that you,
0:38:47 I mean, ’cause I’m telling you those,
0:38:50 your kids, you’re in the golden decade right now,
0:38:53 you’re in the midst, those are literally the best years
0:38:55 and everybody says that they’re all great,
0:38:56 but I don’t buy that.
0:38:58 I think some years are better than others
0:38:59 and you’re in what I’d call the golden decade,
0:39:01 sort of four to 14.
0:39:03 And I sort of knew it, I mostly knew it,
0:39:05 but I wish I’d known it more
0:39:07 and it imposed more rules on myself.
0:39:09 Do you impose any sort of rules
0:39:11 other than trying to spend time with them?
0:39:14 – Yeah, I have a rule, I’m never too tired for my kids.
0:39:16 So if my kids want, if I come home
0:39:18 and my kids might have a baseball catch
0:39:22 and I’m exhausted, I’m still having the baseball catch.
0:39:25 ‘Cause if I’m too tired, when my kids want me,
0:39:27 then my work life balance is way out of whack.
0:39:30 So rule number one for me is I’m never too tired
0:39:31 for my kids.
0:39:33 I have a lot of rules.
0:39:36 I mean, a new one that I just did is nothing to do with time,
0:39:38 but when my kids come into my room,
0:39:41 if I’m on my phone, this is my office.
0:39:42 My phone is my office.
0:39:45 I don’t go to an office, this is my office.
0:39:48 So when my kids come in, if I’m on my phone,
0:39:50 I would, the old me would say,
0:39:53 I would say, give me one second guys,
0:39:54 let me just finish this up.
0:39:56 The new me puts my phone down,
0:40:00 so my kids know that they’re more important than my phone.
0:40:02 So that’s been a big switch.
0:40:06 I have a lot of hard rails around when I use my phone,
0:40:08 so phone time at home.
0:40:13 And all that said, my kids also know that mommy comes first.
0:40:16 Like I’ve been told my whole life,
0:40:19 your kids come first, they don’t.
0:40:22 Like mommy and daddy have to be right or nothing’s right.
0:40:26 So, it’s important for Sarah, my wife and I,
0:40:30 for our kids to know mommy and daddy come first.
0:40:33 And then I’m a big show, don’t tell.
0:40:34 Like I include my kids.
0:40:38 We have family dinners as much as we can.
0:40:40 We don’t say we’re gonna do it four times a week.
0:40:43 As often as we humanly possibly can,
0:40:45 we have family dinners.
0:40:47 And we talk about a lot of things.
0:40:49 So we try to expose our kids to a lot of things.
0:40:51 And we ask them to share a lot of things.
0:40:53 We have family meetings once a week.
0:40:58 So we invest a lot in the family unit.
0:41:01 – Can you describe if it’s not too personal?
0:41:03 I love the idea of a family meeting,
0:41:07 but I’m not entirely sure what’s supposed to happen.
0:41:08 I’m just curious, give us a sense
0:41:10 of what happens in your family meeting.
0:41:15 – Yeah, so we get together and on Sundays and it’s short.
0:41:17 And we just talk about something like one thing
0:41:19 that happened to us this week.
0:41:21 So I said, you know, in school, I failed at this,
0:41:23 I did this, I succeeded in this.
0:41:26 If we have anything that we wanna talk about,
0:41:29 like summer plans or goals or whatever, we’ll bring it up.
0:41:31 It’s a chance for everybody to kind of share,
0:41:35 get up to speed and like communicate
0:41:38 in a group setting.
0:41:40 Sometimes you can vote if it’s like,
0:41:41 hey, you know, we’re thinking about going on a trip
0:41:45 this year with, you know, that kind of stuff gets discussed.
0:41:46 You know what it does, Scott?
0:41:48 It allows everybody to be heard.
0:41:51 I actually like it.
0:41:52 And I’m not a great communicator.
0:41:55 So for me, it’s not, it’s kind of challenging,
0:41:58 but the other rule that we have is when we have guests
0:42:01 at our dinner table, each of the kids has to ask
0:42:04 the guests a question about them.
0:42:08 So it gives them a chance to practice there.
0:42:10 What I think is the most important thing,
0:42:13 which is communication and public speaking.
0:42:15 So that’s another kind of rule that we have.
0:42:17 – So we’ve talked a little bit about fathering.
0:42:19 What advice would you give to a young man
0:42:21 who’s just entering into a relationship
0:42:23 and thinking about getting married?
0:42:26 What do you know now that you wish you’d known
0:42:28 earlier in your marriage?
0:42:30 – Well, in my marriage, before I got married,
0:42:34 we never talked about, what do you wanna feed our kids?
0:42:36 We want our kids to go to a temple or a church
0:42:39 or a religion, like, where does religion come into play?
0:42:43 And, you know, where do we want our kids to go to school?
0:42:44 Private school, public school?
0:42:48 How are we going to, you know, discipline our kids?
0:42:49 What’s our philosophy on discipline?
0:42:54 Like, that never crossed my mind to talk to Sarah about
0:42:56 until we had kids.
0:42:57 You have to eat.
0:42:59 I eat super healthy.
0:43:02 Sarah eats like the other end of the spectrum.
0:43:04 How do you wanna raise our kids?
0:43:07 So, like, we never had those conversations.
0:43:09 And so that’s just something to think about
0:43:10 if you’re getting married, like,
0:43:13 how aligned are you on certain things
0:43:16 and definitely how aligned are you on your values
0:43:17 or whatever.
0:43:18 As far as parenting, you know,
0:43:22 we try to praise the effort as much as we can
0:43:24 and not the result.
0:43:28 So, Charlie, you know, not, oh, you scored three touchdowns.
0:43:31 Like, I love watching how hard you work on the field.
0:43:34 Like, it’s just, I love how much, you know,
0:43:36 how you hustle today.
0:43:40 Praising the effort is a big thing.
0:43:45 We try to expose our kids to as many life experiences,
0:43:49 different people as we can.
0:43:52 – And so it sounds like you have a healthy relationship
0:43:54 with your partner, good kids.
0:43:57 You’ve obviously checked a lot of boxes in entrepreneur.
0:43:59 What’s left for you?
0:44:02 Like, what are you working on if you look out 10 years?
0:44:04 And you think this is really what I’ve liked
0:44:06 to have done or accomplished
0:44:08 that I haven’t done or accomplished already.
0:44:11 What is that or those things?
0:44:13 – Feel like I’m finally at 55.
0:44:17 I’m turning 56 in August in the right lane.
0:44:20 I do a lot of Indian coaching and I like it.
0:44:22 I feel like I’m good at it.
0:44:25 I have a lot of experiences to share
0:44:28 and I just share my experiences in business
0:44:30 and being a dad, all that stuff.
0:44:33 But I also feel like I haven’t,
0:44:34 I’m not really even talked about this,
0:44:37 but I feel like I haven’t really figured out
0:44:42 exactly like what, like that big thing I’m so,
0:44:43 I’ve done big things,
0:44:45 but the big thing I’m supposed to do
0:44:48 to really contribute like to the world,
0:44:49 I don’t think I’ve even hit that yet.
0:44:51 So my eyes are always open for it.
0:44:53 I just don’t, I don’t know.
0:44:57 I lost my dad, my mom and my sister in the last two years.
0:44:59 So it’s changed my perspective a lot
0:45:03 on a lot of different things, you know?
0:45:06 Like what, just like what matters the most to me.
0:45:09 When my mom, my mom died a month ago
0:45:12 and the night she, my sister had been living with my mom
0:45:15 because my dad, when my dad died,
0:45:16 my sister moved into her house where,
0:45:19 and she would walk her to bed every night.
0:45:23 And the night of Mother’s Day on the way to going to bed,
0:45:26 at like 11 o’clock, my sister, my mom stopped my sister
0:45:29 and said, her name’s Jana, my sister.
0:45:34 So Jana, get the nicest glass, glassware that we have,
0:45:37 and get a bottle of champagne.
0:45:39 So my sister got the glass, you know,
0:45:41 like the nicest glasses in my mom’s house,
0:45:43 they poured a glass of champagne,
0:45:44 and they made, my mother’s even drank,
0:45:47 they made a toast and she never woke up.
0:45:52 So like she like basically toasted her life
0:45:56 on the last night of her life, which is amazing.
0:45:59 But I think like, when I think back to that,
0:46:02 like to live a life that you can toast,
0:46:04 I don’t know what I’m gonna do in 10 years.
0:46:06 I have no idea.
0:46:09 But if I had the last glass of champagne tonight,
0:46:13 I mean, I’m toasting to an insanely amazing life already.
0:46:17 So, you know, it can only get better, I think.
0:46:19 But I don’t know what that looks like for me.
0:46:20 – So that’s where to go.
0:46:25 It’s unusual, it’s as if your mother knew that that was it.
0:46:27 – Yeah, it was unreal.
0:46:30 – And having experienced that kind of loss
0:46:33 in such a short concentrated time period, as it,
0:46:35 I mean, obviously it’s gotta impact you emotionally,
0:46:37 but has it impacted you in terms of how you approach
0:46:40 relationships or what you’re thinking about professionally
0:46:42 or how you spend your time?
0:46:44 – Yeah, I mean, I’ve always been good with spending my time.
0:46:47 Like I said, I invest a lot in planning,
0:46:50 for like, I plan most of my year in advance.
0:46:52 I have this big calendar I put
0:46:55 as much as the things that I want to do in advance.
0:46:58 Before I plan my work, I plan my life.
0:47:00 Trips, races, blah, blah, blah, blah,
0:47:01 one-on-one trips with my kids.
0:47:04 So like, and then I just kind of follow the script.
0:47:08 But I think that what’s changed is just a lot
0:47:12 of the small things that I used to like really spend
0:47:16 a lot of energy on, or just bounce off me.
0:47:19 – And if you could give your 25 year old self,
0:47:23 you know, say you had maybe 15 or 30 seconds with them,
0:47:24 right?
0:47:25 You find the time machine, that’s the good news.
0:47:28 The bad news is you only have 15 or 30 seconds
0:47:29 with your 25 year old self.
0:47:31 What would you say to him?
0:47:35 – I would probably say a quote that Gandhi had
0:47:40 that I lived by, which is, “Learn like you’ll live forever
0:47:44 “and live like you’ll die tomorrow.”
0:47:46 I would tell my 25 year old self to like,
0:47:49 learn, experience as much as you can,
0:47:51 do as many things as you can,
0:47:53 with the hope that those experiences
0:47:56 will help you all the way down the line,
0:47:59 but also live like you’ll die tomorrow.
0:48:01 – Jesse Itzler is a serial entrepreneur,
0:48:03 a New York Times bestselling author,
0:48:06 part owner of the Atlanta Hawks and an ultra marathon runner.
0:48:08 Most notably, Jesse sold his private jet company,
0:48:11 Marquis Jet, to Berkshire Hathaway,
0:48:14 and his Ziko coconut water brand, the Coca-Cola.
0:48:17 His bestselling books include “Living with a Seal”
0:48:18 and “Living with Monks.”
0:48:22 He joins us from his home in Atlanta.
0:48:24 By the way, how did Atlanta happen?
0:48:26 I, we didn’t go there, Jesse.
0:48:28 – Well, I was a New Yorker for 25 years.
0:48:30 I met my wife.
0:48:33 My wife was a customer of mine at Marquis Jet.
0:48:34 That’s where we met.
0:48:37 And when we got engaged and we’re dating,
0:48:40 her business, Spanx, was based in Atlanta.
0:48:44 And we were splitting our time and then we had a kid
0:48:45 and we’re like, we got a pick.
0:48:48 And Spanx was way more important
0:48:50 than what I was doing and I moved down to Atlanta.
0:48:52 We never moved back.
0:48:53 – I always say around big decisions.
0:48:55 I’m an influencer, not a decision maker
0:48:57 and influencers being generous.
0:48:59 Anyways, Jesse, I really enjoyed this conversation.
0:49:00 Best to you and yours.
0:49:02 (upbeat music)
0:49:04 This episode was produced by Caroline Shagren.
0:49:07 Jennifer Sanchez is our associate producer
0:49:09 and Drew Burroughs is our technical director.
0:49:11 Thank you for listening to “The Prop G-Pod”
0:49:12 from the Box Media Podcast Network.
0:49:15 We will catch you on Saturday for “No Mercy, No Malice”
0:49:16 as read by George Hahn.
0:49:19 And please follow our “Prop G-Markets” pod.
0:49:23 Again, that’s the “Prop G-Markets” pod and subscribe.
0:49:25 Wherever you get your pods for new episodes
0:49:26 every Monday and Thursday.
0:49:28 You won’t get these episodes unless you subscribe
0:49:30 to the “Prop G-Markets” pod.
0:49:33 (upbeat music)
0:49:38 Woohoo!
0:49:48 [BLANK_AUDIO]

0:00:00 (upbeat music)
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0:00:30 Visit HubSpot.com to get started today.
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0:01:16 Welcome to the PropG pods office hours.
0:01:17 This is the part of the show
0:01:18 where we answer questions about business,
0:01:19 big tech, entrepreneurship,
0:01:21 and whatever else is on your mind.
0:01:22 – Hey, PropG.
0:01:23 – Hey, Scott and team.
0:01:23 – Hey, Scott.
0:01:24 – Hi, PropG.
0:01:25 – Hey, PropG.
0:01:26 – Hey, PropG.
0:01:27 – Hey, PropG.
0:01:28 – And last week’s office hours,
0:01:29 I answered your questions surrounding
0:01:31 OpenAI’s recent content deals,
0:01:33 why I tell crude jokes,
0:01:35 and what the dog’s morning routine looks like.
0:01:38 It’s about me pissing on anything I want.
0:01:40 (beep)
0:01:42 – Now, what I was worried about is that I would say,
0:01:43 to me, the business news for this morning
0:01:47 in the voice of Reuters with a pinch of,
0:01:48 I don’t know, Anderson Cooper,
0:01:50 and with some humor from Dave Chappelle,
0:01:52 and I would never need to go to CNN,
0:01:53 and I would never need to go to Reuters,
0:01:56 and you’d even have more oxygen sucked out of the room.
0:01:57 Of media companies,
0:01:58 ’cause they could start mimicking their voice
0:02:00 and not pay them any royalties.
0:02:04 I mean, there’s a reason why people aren’t crude in media,
0:02:06 because is it worth the risk of offending people?
0:02:10 If the kind of the core, or the white meat,
0:02:13 of what you do is excellence, or insight,
0:02:16 or being funny generally about stuff,
0:02:20 then why do you need to, you know, go NC17?
0:02:24 My morning routine is I get up, I have coffee,
0:02:26 I read a bunch of news,
0:02:27 I hang out with the dogs again.
0:02:31 If I’m really motivated, I’ll do some exercise,
0:02:32 sometimes I put it off.
0:02:33 I try to work out about four times a week,
0:02:36 I’ve worked out four times a week for about,
0:02:39 about 40 years, it is my antidepressant.
0:02:41 Today, we’ll talk about Tesla,
0:02:44 early career advice, and discuss how to find a mentor.
0:02:46 So, with that, first question.
0:02:50 – Hey, Prof. G, I’m Chris from Vancouver,
0:02:52 longtime listener, first time caller.
0:02:53 I’ve been sitting here watching
0:02:54 the Tesla Shareholder meeting,
0:02:56 where Elon is trying to convince folks
0:02:58 to pay him $40 billion to not become distracted
0:03:01 by other things, and it made me wonder,
0:03:04 if they’ve let him go and made you CEO,
0:03:06 what would you do next for Tesla?
0:03:08 Love your work, peace.
0:03:09 – Thanks for the question,
0:03:11 and it sounds like we’re both a little bit cynical
0:03:13 about Elon.
0:03:14 So, some context here.
0:03:16 Tesla Shareholders approved CEO Elon Musk’s
0:03:19 $56 billion pay package, a move that allows the company
0:03:21 to move its incorporation from Delaware to Texas.
0:03:23 According to a Delaware judge,
0:03:25 it’s the largest pay package on record
0:03:26 for the public markets.
0:03:29 It’s 33 times larger than Musk’s prior compensation plan.
0:03:32 Who voted in favor of the compensation package?
0:03:34 77% of shareholders.
0:03:35 Tesla’s largest institutional investors,
0:03:37 BlackRock and Vanguard,
0:03:40 both voted in favor of the pay package.
0:03:42 According to diligent data,
0:03:44 BlackRock and Vanguard have historically supported
0:03:47 at least 90% of pay packages at US companies every year.
0:03:52 Like, I think the most difficult thing about,
0:03:53 I’ve served on a bunch of boards,
0:03:56 the most difficult thing, hands down, is compensation.
0:04:00 And I find in this instance,
0:04:01 that the board did not do its job
0:04:03 because what you want is a compensation package
0:04:06 that is market and keeps the CEO focused.
0:04:08 First off, the CEO is not focused.
0:04:09 He’s actually here and can,
0:04:12 trying to convince advertisers that Twitter
0:04:15 is not ground central for Nazi porn.
0:04:16 Actually, they have a feature.
0:04:18 It’s called “Plage de Nazi porn.”
0:04:19 Not true.
0:04:21 I can’t even imagine.
0:04:22 I literally,
0:04:24 literally the easiest way to get fired
0:04:26 as a brand marketer or a media planner
0:04:29 would be to advertise on Twitter right now.
0:04:30 Anyways, they basically said,
0:04:33 “All right, I think the argument goes something like this.”
0:04:37 When he was awarded that pay package,
0:04:40 it was options and they were worth a lot less
0:04:41 than $56 billion.
0:04:43 I think it’s actually now worth closer to $40 billion.
0:04:45 That it was options and they were worth
0:04:47 single digits of billions.
0:04:49 And the guy, you gotta give it to the guy.
0:04:51 The guy has a certain level of vision
0:04:53 and has built singular companies.
0:04:54 SpaceX is singular.
0:04:56 By the way, my favorite product of 2024,
0:04:58 SpaceX or Starlink.
0:05:02 I’ve been on a plane where the Starlink network comes up
0:05:05 and I select it and then two minutes later,
0:05:09 my son calls me on FaceTime and it is perfect.
0:05:11 Also on that same flight,
0:05:13 the pilots had looked out to the left
0:05:15 and a SpaceX rocket had launched and I thought,
0:05:19 “Okay, don’t like the guy, but I gotta give it to him.”
0:05:21 He has a unique vision and the ability
0:05:24 to action that sort of vision.
0:05:26 And I think that shareholders have said,
0:05:27 “Look, the guy’s been really good for us.”
0:05:30 The shareholder, sure as the stock come down from eyes,
0:05:32 but anyone who’s been in this stock longer than,
0:05:34 I don’t know, 18 months has probably not only made money,
0:05:36 but made a lot of money.
0:05:38 So I think they wanna keep him interested.
0:05:41 Now, my personal experience rubs against us
0:05:42 or this rubs me against the wrong way
0:05:46 because when I had L2, I was investing options.
0:05:48 I had a large stake as our founder shares.
0:05:50 And I said, “I want options and equity
0:05:51 “to continue to work here.”
0:05:52 And they said, “Scott, you’re fully staked.
0:05:55 “You’re motivated, I think I own 40 or 45% of the company.
0:05:58 “We don’t feel a need to give you more.”
0:06:00 But again, I’m not Elon Musk.
0:06:02 Now, also what is interesting
0:06:03 and I don’t know how this is gonna play out
0:06:06 is that the Delaware chancellor
0:06:08 or the head of the chancellor’s court there
0:06:09 does not seem impressed by Elon.
0:06:12 And it’s basically said that the board did not do its job
0:06:14 and that this was totally out of line
0:06:16 with their responsibility as fiduciaries
0:06:18 to just do what is market
0:06:20 and/or keeps him motivated
0:06:22 and she rejected the pay package.
0:06:24 I think the outcome here is that one,
0:06:27 I think one way or another, he is going to get that money.
0:06:29 It’s unclear now whether the Delaware court,
0:06:32 the block that deal back in January will accept the revote
0:06:34 and allow Tesla to reinstate Elon’s pay.
0:06:37 Some legal experts believe this could stretch out for months.
0:06:39 Meanwhile, Tesla has been struggling with weak sales,
0:06:41 increased competition in China and layoffs.
0:06:44 The stock is down 26% year to date.
0:06:46 I think over the long haul,
0:06:49 Tesla will trade like an automobile company.
0:06:51 I think the stock gets cut by 70 or 80%
0:06:53 and still looks expensive.
0:06:55 And whenever I try to have a rational conversation
0:06:58 on valuation, people will claim that it’s an energy company
0:06:59 or it’s a software company.
0:07:01 ‘Cause if they acknowledge it’s an automobile company,
0:07:03 automobile company is trade within a certain range
0:07:06 and really well managed ones, including Toyota,
0:07:08 if you apply their multiple against the above,
0:07:10 the stock declines 70, 80, 90%.
0:07:13 And he’s been able to defy gravity.
0:07:15 It is an exceptional car.
0:07:16 I owed to Tesla for a while
0:07:18 before he started calling me names on Twitter
0:07:19 and then I sold it.
0:07:21 First, I took a big greasy dump in the passenger seat.
0:07:23 Is that wrong?
0:07:24 Is that wrong?
0:07:25 Anyway, thanks for the question.
0:07:29 I don’t have a lot of insight here other than to say,
0:07:31 what’s the point of being successful
0:07:31 if you’re not gonna be kind?
0:07:34 When you’re clawing your way to the,
0:07:35 I’m gonna say clawing your way to the top,
0:07:37 when you’re an entrepreneur, you can’t overpay people
0:07:41 because businesses don’t go out of business
0:07:41 because they’re bad ideas.
0:07:43 They go out of business because they ran out of money.
0:07:44 So you gotta throw nickels around
0:07:45 like they’re manhole covers.
0:07:47 You gotta be pretty Darwinian.
0:07:50 Entrepreneurship is full body contact.
0:07:52 But once you achieve a certain level of success,
0:07:54 and I’m not saying don’t be kind along the way,
0:07:55 but that’s your opportunity to have a lot of fun
0:07:56 and be really kind.
0:07:58 Anyways, enough of the virtue signaling.
0:07:59 Thanks for the question.
0:08:01 Question number two.
0:08:02 – Hey, drop G.
0:08:05 Got to make quick questions from a fresh college grad here.
0:08:08 For context, I am from and just graduated college in Indiana
0:08:10 and I’m moving to LA in a month.
0:08:11 I couldn’t be more excited
0:08:13 as I’ve always wanted to live in a big city like LA
0:08:15 and I love what I’m gonna be doing.
0:08:17 I’ll be working sales and business development
0:08:19 at a Series B retail tech startup
0:08:20 with around 70 employees
0:08:22 and for a super experienced leadership team
0:08:24 that I really believe in.
0:08:26 With two huge new life changes occurring simultaneously,
0:08:27 I’d love to hear your advice
0:08:30 as you’ve been in both these positions before.
0:08:32 First, how can I maximize my value for the company
0:08:34 I’m working for as an entry level hire?
0:08:36 What are some actionable steps that I can take
0:08:37 to really stand out and be successful?
0:08:39 With an IP on the horizon in a couple of years,
0:08:42 I wanna pour all I can as I have stock options on the table.
0:08:45 Also, how can I maximize my life outside of work
0:08:47 in a cultural hub like LA?
0:08:49 Looking at continuing to build my own personal brand
0:08:50 but also wanna make sure
0:08:52 that I’m joining all the LA has to offer.
0:08:53 Thank you so much for your time
0:08:55 and I wanna say how much I really love your content
0:08:57 as it’s refreshing to have someone give real takes
0:09:00 on business relationships and life derived
0:09:01 from their actual experiences.
0:09:03 There’s so much posturing today.
0:09:05 I appreciate you, Prof. G.
0:09:06 – So first off, anonymous.
0:09:10 Can you not be anonymous and specifically can I be you?
0:09:12 – My God, you’re a just graduated from Indiana
0:09:15 and you’re moving to LA with a good job.
0:09:17 Boss, you are in the sweet spot.
0:09:19 So okay, what to do?
0:09:22 First off, figure out when everyone gets to work
0:09:24 and try and show up a few minutes before them
0:09:26 and a few minutes later.
0:09:28 When I started at Morgan Stanley,
0:09:29 I wasn’t as talented as the other kids,
0:09:32 not because UCLA wasn’t an amazing education
0:09:33 but because I didn’t work very hard at UCLA
0:09:36 and I just didn’t have the same skills that they did.
0:09:38 So I decided to lean into my strengths,
0:09:40 my strengths for my youth and my fitness
0:09:44 and the fact that I did not have dogs, kids or girlfriends
0:09:45 waiting for me at home.
0:09:47 I was living at home with my mother.
0:09:49 I had literally no relationships, nothing going on.
0:09:50 So I said, here’s an idea.
0:09:53 I’m gonna go into work Tuesday morning
0:09:56 and I’m gonna work to Wednesday night at five every week.
0:09:58 And I developed a reputation for this crazy kid
0:09:59 who worked 36 hours straight
0:10:01 but crazy in a good way because investment banking
0:10:04 had this sort of weird fucked up abusive culture
0:10:05 in the ’80s and ’90s.
0:10:07 And I’m not suggesting you’d go to that extreme
0:10:10 but try and be kind of first and last out.
0:10:11 Show that you come to play.
0:10:14 Josh Brown from CNBC
0:10:16 and from Ritz Hold Wealth Management
0:10:18 had a really good idea that I thought was very simple.
0:10:19 I never thought about it.
0:10:22 Find the shittiest part of your boss’s job
0:10:24 and take it off their plate
0:10:27 and slowly but surely try and give them time back.
0:10:28 If you can do anything,
0:10:30 whether it’s responding to RFPs,
0:10:31 I don’t know what job you’re doing
0:10:33 but try and really understand,
0:10:36 learn and do stuff and volunteer for stuff
0:10:39 and do your best to try and take the worst part
0:10:41 of other people’s jobs off their plate
0:10:43 such that you become indispensable to them.
0:10:45 ‘Cause if you make their life easier,
0:10:47 you’re gonna be indispensable.
0:10:51 Try and praise, always praise people behind their backs.
0:10:56 Be known as the guy that praises people behind their backs.
0:10:59 Listen when you’re in meetings,
0:11:02 try and really understand what’s going on.
0:11:05 Be very social, ask people out to coffees,
0:11:07 ask them a bunch of questions.
0:11:09 You don’t need to be explicit about finding mentors.
0:11:11 I’ve never said to anyone, “Will you be my mentor?”
0:11:12 But I am blessed with a ton of mentors
0:11:15 because I would ask them out for coffee.
0:11:18 I’d ask them a lot of questions when you’re older
0:11:19 and you’ve got some experience under your belt.
0:11:21 You like it when people ask you questions.
0:11:23 It’s the reason I have this damn podcast
0:11:25 is I like giving advice.
0:11:27 I feel like you have value to add.
0:11:29 You wanna share it with young men and young women.
0:11:31 So don’t be afraid to ask people out for coffee
0:11:34 and ask for their advice, ask for their feedback
0:11:36 and generally speaking,
0:11:38 I think success is in the last 10%.
0:11:39 What do I mean by that?
0:11:42 We used to write RFPs at my first up at Morgan Stanley
0:11:47 and Morgan Stanley had this kind of cultural zeitgeist
0:11:49 where if there were any errors, you could be fired.
0:11:50 And we used to read things,
0:11:52 not only forwards to prove them,
0:11:53 but then backwards to make sure
0:11:55 that everything was perfect.
0:11:56 And it was very stressful,
0:11:58 but it was an outstanding training.
0:12:00 So what I would try and bring
0:12:02 is a massive attention to detail.
0:12:06 Success is in the last 10% and be known also as the guy
0:12:08 that anything that leaves your desk
0:12:11 is near perfect or perfect.
0:12:13 Terms of LA, oh my God, oh my God,
0:12:14 is El Coyote still around?
0:12:16 Is the Hollywood Bowl still around?
0:12:18 Maybe the Greek Theater, maybe Zuma Beach?
0:12:19 Shit, I don’t know.
0:12:21 What not to do?
0:12:23 Jesus Christ, what not to do?
0:12:25 The Uber drivers in LA are hot.
0:12:27 Everything about LA is wonderful.
0:12:29 Maybe go to the counter at Beverly Hills Hotel
0:12:31 and tell them that Scott Galloway sent you.
0:12:33 I don’t know, maybe go to the polo lounge on a date,
0:12:35 order a drink, order a drink or two,
0:12:37 maybe go to the, maybe go to the,
0:12:38 I don’t know, Jesus Christ,
0:12:42 there are so many amazing things to do in LA.
0:12:45 I love the influence that Mexican culture has had on LA.
0:12:48 I love the fabulousness of the entertainment industry.
0:12:49 I don’t know, take a run on the beach,
0:12:50 maybe go down to shutters,
0:12:53 have a little drink down there on the playa,
0:12:56 on the playa de Los Angeles.
0:12:58 Boss, you’re gonna get into so much trouble there.
0:13:01 It is such a wonderful place to live.
0:13:03 You are in the sweet spot of your life.
0:13:06 Be kind, work your ass off.
0:13:09 Also, also get someone with really good taste
0:13:11 to buy you kind of five good work outfits.
0:13:12 I don’t know if it’s a suit or whatever.
0:13:14 So you have a uniform, you don’t need to think about it,
0:13:16 but you look competent.
0:13:18 Take pride in your appearance.
0:13:19 Try and find time for exercise.
0:13:24 Jesus Christ, I’ve got 25 hours planned every day.
0:13:26 Let me finish where I started.
0:13:28 It is really good to be you, Indiana.
0:13:32 We have one quick break before our final question.
0:13:33 Stay with us.
0:13:38 – My dad works in B2B marketing,
0:13:40 but I never really knew what that meant.
0:13:43 Then one day my dad came by my school for a career day
0:13:47 and told everyone in my class he was a big row ass man.
0:13:49 Then he just kept saying things like,
0:13:53 the bigger the row ass, the better, over and over.
0:13:55 My friends still laugh at me to this day.
0:13:59 I think it means calculating a return on ad spend.
0:14:00 One thing’s for sure.
0:14:03 I’ll be known as the row ass man’s kid
0:14:04 for the rest of my days.
0:14:07 Why can’t you just be a fireman or a lawyer?
0:14:09 Why?
0:14:10 You ruined my life, dad.
0:14:14 – Not everyone gets B2B, but LinkedIn has the people who do.
0:14:16 And with ads on LinkedIn,
0:14:18 you’ll be able to reach people based on job title,
0:14:20 industry, likelihood to buy and more.
0:14:22 Start converting your B2B audience
0:14:24 into high quality leads today.
0:14:27 We’ll even give you $100 credit on your next ad campaign.
0:14:30 Go to linkedin.com/scot to claim your credit.
0:14:32 That’s linkedin.com/scot.
0:14:33 Terms and conditions apply.
0:14:36 LinkedIn, the place to be, to be.
0:14:40 – Support for this show comes from Fundrise.
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0:16:47 Welcome back, question number three.
0:16:48 – Hey Scott, my name is Joseph.
0:16:52 I’m a 31-year-old male and I’m struggling.
0:16:53 To keep things short, when I was in my 20s,
0:16:55 I got into drugs and partying.
0:16:58 I cleaned myself up, I’ve been clean for seven years,
0:17:01 and I found my passion in photography and videography.
0:17:02 It doesn’t pay all the bills,
0:17:04 so I’m working two other jobs
0:17:06 and it’s just getting really tough.
0:17:08 And I want to keep on leveling up.
0:17:10 I want to be successful in life.
0:17:13 I want to wake up and stop worrying about money.
0:17:14 And I feel like I’ve hit this part in my life
0:17:17 where I’ve worked so hard on myself
0:17:20 and I’m ready to ask for help.
0:17:23 And my question to you is, how can I find a mentor?
0:17:25 I feel like I’m at this position in my life
0:17:28 where my parents, they’re beautiful people.
0:17:30 They raise me with kindness, loyalty, respect,
0:17:32 but I don’t feel like they could help me get to this level
0:17:34 of success that I’m looking for.
0:17:37 Like you said, they’re not superheroes.
0:17:39 So how would you go about finding a mentor?
0:17:42 What do you think of mentors?
0:17:45 Love your podcast and thank you so much
0:17:47 for everything you do and say.
0:17:50 So first off, Joseph from Undisclosed,
0:17:54 you’re 31, which means you’re still incredibly young.
0:17:56 It means you’re probably gonna live
0:17:58 another 70 or 80 years.
0:17:59 The fact that you’re smart enough to realize
0:18:03 you were abusing substances and parting a lot.
0:18:05 By the way, the 20s are a great decade.
0:18:07 You probably also enjoyed that a certain amount,
0:18:08 or at least I hope you did.
0:18:09 And the fact that you’ve cleaned up
0:18:12 and you’re self-aware enough to know that you’ve cleaned up,
0:18:14 the fact that you found something you’re good at
0:18:16 and you’re working three jobs.
0:18:19 Boss, you’re like, you know, you’re trying, right?
0:18:22 And what I would say to you is first off,
0:18:23 you need to forgive yourself.
0:18:26 And that is if you’re in any way down on yourself,
0:18:27 I mean, be stressed.
0:18:28 Be like, “Shit, this is hard, fine.”
0:18:29 But don’t be down on yourself.
0:18:34 You’ve recognized what needed to change in your life.
0:18:36 You made that change.
0:18:38 It scares me that you have three jobs.
0:18:41 And what I would say is that photography
0:18:42 is one of those passion fields.
0:18:44 What do I mean by that?
0:18:46 I think it’s very difficult in a passion field
0:18:51 to make decent living in less year in the top 1%.
0:18:54 And not only in the top 1% from a skill standpoint,
0:18:58 but in the top 1% in terms of just pure luck.
0:18:59 And what I would ask you is,
0:19:00 what are the other two things you’re doing
0:19:03 and do you see money there and are you excelling?
0:19:06 Because what I found, I mean, I wanted to be an athlete,
0:19:08 then I wanted to be a pediatrician.
0:19:09 I don’t know if that’s a romance industry.
0:19:10 I wanted to be investment banking,
0:19:12 which was a high-precision job.
0:19:13 And I ended up finding analytics.
0:19:16 And so the idea of having three side gates
0:19:19 or two side hustles to try and make photography work,
0:19:20 I think that’s difficult now.
0:19:22 This is all very situational.
0:19:23 So this is what I want you to do.
0:19:26 I want you to assemble a kitchen cabinet
0:19:27 and you call them mentors.
0:19:29 I never explicitly asked anyone to be my mentor.
0:19:32 What I did was I would call people or I would say,
0:19:33 can I take you out to coffee?
0:19:35 I’d love your advice on some stuff.
0:19:36 Even if it’s friends you meet through photography,
0:19:40 and it’s smart people you met out socially,
0:19:41 friends of your parents
0:19:43 who have their shit together professionally.
0:19:44 I find that generally speaking,
0:19:46 people are very open to giving advice,
0:19:49 that people are really good at running other people’s lives.
0:19:50 And so I wouldn’t be afraid,
0:19:52 I wouldn’t say, will you be my mentor?
0:19:53 ‘Cause that sounds like you gotta commit
0:19:54 to a certain amount of time,
0:19:56 but I wouldn’t be afraid to reach out to people
0:19:58 and kind of assemble a kitchen cabinet.
0:19:59 And I don’t make,
0:20:03 this is, you’re so much smarter than I was at your age.
0:20:05 I thought leadership and having your shit together
0:20:08 and being a man was saying, I know what’s right.
0:20:11 And I would hide everything that was wrong in my life
0:20:13 and pretend that I had my act together
0:20:16 and not take advice and assess the situation
0:20:17 and try and convince everybody
0:20:19 that what I would decide and what I was doing
0:20:21 was the right thing, that that was leadership.
0:20:23 The fact that you are even open
0:20:28 to trying to find mentors in that you recognize your 20s
0:20:30 and that you are struggling and that things are hard
0:20:32 means you’re way ahead of where I was
0:20:34 and where most people are.
0:20:37 And also to be clear,
0:20:41 as we talk about your story here and listen to you,
0:20:46 I can tell you there are millions of people in their 30s
0:20:51 and 40s who are struggling to keep up in this economy
0:20:52 who think, Jesus Christ,
0:20:56 I didn’t realize this, it would be this fucking hard.
0:20:59 I mean, I had some really dark moments.
0:21:03 So the first is, okay, forgive yourself,
0:21:05 try and find, ask a group of people for advice.
0:21:07 I don’t like the idea of having three jobs.
0:21:09 So what I would say is you need to narrow in on two,
0:21:12 ideally one that will provide some economic security for you
0:21:15 or there’s a clear path to economic security.
0:21:17 In order to assess that more accurately,
0:21:18 I can’t do that remote.
0:21:20 I would need to ask you a bunch more questions.
0:21:22 So don’t be afraid to ask people for advice
0:21:24 and then keep asking them for questions
0:21:27 and get a sense for their skills.
0:21:28 And if you think they’re giving you good advice
0:21:32 and triangulate off of other people’s advice.
0:21:34 And if you really get down
0:21:37 and you really are struggling with your mental health,
0:21:41 and when I say struggling for your mental health,
0:21:43 I found some times in my life I was just sort of stuck
0:21:46 and I had trouble motivating in the things that,
0:21:47 the things that I usually got joy from
0:21:49 were no longer giving me joy.
0:21:52 And it wasn’t sad
0:21:54 and depression registers differently in everybody.
0:21:58 For me, I feel hollow and I feel nothing.
0:22:01 I get emotional and I cry a lot
0:22:03 and that’s usually a symbol I recognize for me
0:22:04 when I’m in a good place mentally.
0:22:06 I’m more in touch with my emotions.
0:22:09 If you feel like you’re struggling on a mental health level,
0:22:12 I would say the most important thing is to reach out
0:22:13 and ask for help.
0:22:15 And we actually have some sponsors here
0:22:17 who are in the business of telehealth.
0:22:21 And I’d be happy if you want to email me.
0:22:25 I’m scott@stern.nyu.edu and reference this podcast.
0:22:27 I’d be happy to help you financially
0:22:29 around seeking that type of help
0:22:31 if you feel it would be helpful for you.
0:22:34 But let me just recap here.
0:22:37 So many people listening to what you said
0:22:38 are right there with you.
0:22:40 And the fact that you’re working this hard
0:22:42 and thinking thoughtfully means that,
0:22:44 means that you’re likely gonna be fine.
0:22:47 I appreciate the call and I really do wish you the best.
0:22:50 That’s all for this episode.
0:22:51 If you’d like to submit a question,
0:22:53 please email a voice recording
0:22:54 to officehours@propertymedia.com.
0:22:58 Again, that’s officehours@propertymedia.com.
0:23:01 (water splashing)
0:23:11 [BLANK_AUDIO]

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0:01:11 Today’s number, $535,000. That’s how much Ferrari’s first-ever electric car will cost. True story.
0:01:17 I came up to Ed. I drove up in a Ferrari and I said, “Ed, if you bust your ass, work really hard,
0:01:24 and devote your entire life to properties, someday, someday, I will have two Ferraris, bitch.”
0:01:37 [Music]
0:01:42 Welcome to ProFG Markets. Ed, it’s true. It’s true.
0:01:48 A Ferrari is like a consistent, reliable erection. I don’t have a Ferrari, Ed.
0:01:55 Today, we’re discussing Netflix entertainment venues and takeaways from Cannes, from Cannes, where I still am.
0:02:00 Here with the news is ProFG media analyst Ed Elson. Ed, what is a good word?
0:02:04 You’re looking at a little sunburn. Have you gotten too much sun?
0:02:08 I think it’s rosy. I’m at that age where when I drink, I turn a bright, like, it’s not even red.
0:02:14 It’s more like a pink before you get bloated and have a stroke or something.
0:02:20 It’s just a very unhealthy, like, it’s like rosacea. I don’t know, rosacea means a rash.
0:02:24 It’s just, and then it smeared all over my body. I just look like shit.
0:02:25 Very good. How’s it been?
0:02:28 It’s, you know what? It’s been wonderful. It’s gone really fast.
0:02:32 It’s nice. I’m here with my boys and we’re staying at a fancy hotel and they do…
0:02:33 Where are you staying?
0:02:36 We’re at the hotel du Cap, of course, and we love it here.
0:02:47 And then I go, in this total baller moment, I take a zodiac into the Palais and then I tell people the Arab brand is over and for some reason they keep bringing me back.
0:02:53 And it’s amazing. Elon is here with Linda Yaccarino and we’ll talk more about that.
0:02:58 Yeah, this is, I’ve been to this conference more than any conference ever.
0:03:04 I wouldn’t come to Cannes just for Cannes. I wouldn’t come for Alliance just for Alliance, but the combination together is absolutely wonderful.
0:03:06 And your boys, how are they enjoying it?
0:03:13 They love it. You know, they just, they just want to be, they just want to be with us in a place that has 38 Euro hamburgers.
0:03:22 So they love it. I mean, they get these hilarious order room service and then call me and say, “Dad, Dad, can I order the 28 Euro cheesecake?”
0:03:24 And I’m like, “No. No.”
0:03:28 Yeah. What’s your policy on a room service? Are they allowed to do that?
0:03:33 My parents always said I wasn’t allowed to do that. And I also wasn’t allowed to get to take any snacks from the ball.
0:03:35 That was like that line. Can’t do that.
0:03:41 Oh my God. The closest my father’s ever come to violence is one day, I had never been in a hotel. So I was like 12.
0:03:47 And we went and my dad, after the divorce, took me and his new wife, my new mommy.
0:03:49 His seventh wife.
0:03:55 Took me to Hawaii and I somehow ended up in a room. It was me and my sister in a room and I don’t know what my sister was doing.
0:04:04 And I found out I opened this cupboard and there were all these amazing chocolates and snacks and I just went, “Ape shit.” I had never seen anything like that.
0:04:06 It was like opening stuff just to try it.
0:04:07 Hell yeah.
0:04:18 And then he walked in and he saw that and I thought, “My dad, it was the threat of violence that scared me more than anything. My dad, my father actually never beat me.”
0:04:20 So he didn’t bring out the thick ear.
0:04:30 Yeah, but he always seemed just really like a hair trigger away from beating the shit out of me. And he used to threaten a lot and he was very quiet and very intense.
0:04:34 Anyways, that was the closest I thought, “Okay, this is it. This is it.”
0:04:42 And he explained to me and then he walked me through the prices and every time he’d be like, “And Pringles are $3 at fucking A.”
0:04:53 And he’d get like all emotional. It was so torturous. Anyways, hold me Ed and you wonder why I want to pay you minimum wage. You wonder why.
0:04:55 All right, get on with the news. Break out the news.
0:04:57 Let’s start with our weekly review of Market Vitals.
0:05:13 The S&P 500 topped 5500 for the first time. The dollar was flat. Bitcoin hit a one month low and the yield on 10-year treasuries was volatile, shifting to the headlines.
0:05:24 Inflation in the UK fell to its lowest level in almost three years and hit the Bank of England’s target rate. Prices rose only 2% in May from a year earlier. That’s down from 2.3% in April.
0:05:28 And that metric will also be a key talking point ahead of the election next week.
0:05:41 Apple has reportedly stopped working on the new generation of its Vision Pro headset. The company is still developing a cheaper version with fewer features, but according to the information, it has deprioritized the next generation of the device due to slow and sales.
0:05:56 And finally, NVIDIA is now the most valuable company in the world with a market cap of roughly $3.3 trillion. The company’s rise to the top is among one of the fastest in market history, adding $3 trillion in market cap over the past 20 months.
0:05:59 That’s just insane. Scott, where should we start?
0:06:16 Well, let’s start with the boring stuff. Inflation in the UK, it’s great. That’s sort of what Chairman Powell in the US has said is the target is 2%. So, I mean, inflation hit the UK really hard. It escalated so dramatically, so fast that maybe this is a little bit of checkback.
0:06:34 I wouldn’t be surprised if it unfortunately goes negative. I mean, the UK economy is just, the bottom line is this is really fucked up. After spending a bunch of time in the UK, I think, okay, whoever’s running the economy here is not, I don’t know, what’s the term? They have their head up their arse.
0:06:44 Look, I’m happy. I think this is great. I think inflation across the West is coming down. I don’t know if it’s energy prices. Do you have any color on what brought inflation down in the UK?
0:06:56 I mean, it’s a boring answer. I really think it’s just a mix of everything. I think it’s rate heights coming into effect. I think it’s supply chains loosening up. I think it’s just low consumer confidence, which was decreasing spending.
0:07:08 I think it could also be, as you say, they went up so high and it’s sort of that Danny Blanchflower regulating effect that we’ve talked about where it’s just, you know, wages aren’t keeping up and so prices have to come back down again.
0:07:19 It’s not totally clear. This is clearly a global trend. I mean, prices are generally speaking coming down. And I think we’re going to see a lot more of these positive inflation headlines start to roll in.
0:07:30 But I do also think we need to take all of them with a grain of salt. And the UK is a great example of that because, yes, 2% inflation last month, that sounds pretty good.
0:07:42 But a year ago, it was 9%. And the year before that, it was also 9%, which means that in the past three years, prices of everything have risen more than 20%. So it’s compounded.
0:07:54 So I think what people in the UK should think about is, if your salary hasn’t increased more than 20% in the past three years, you are literally falling behind economically.
0:08:05 Quality of life has gone down. Exactly. And, you know, I think a lot of employers are probably going to use this as, oh, I think we’re out of the woods. You know, that’s going to be probably a big negotiating point for employers.
0:08:20 And from an acceleration perspective, yeah, we might be, it might be over. But from an absolute perspective, you know, I caught in the milk that cost a pound three years ago, it costs between a pound 20 and a pound 25 now.
0:08:29 I mean, that’s, that really hits lower middle-income households, right? Because they’re not, they weren’t eating out to begin with very often, but 25% higher.
0:08:45 Also, rent over the last year, paid to private landlords in the UK, is risen by 9% in this year alone. So, you know, this is, I don’t know, I liked what Kyla said, a vibe session, you know, the lower middle-income homes, they have no choice.
0:08:54 They have to pay, they pay a disproportionate amount of their disposable income on rent and food, meaning that when these things go up in price, it really hits them hard.
0:09:01 So I’m trying to think like, what’s come down in price, Range Rovers or Energy, or what’s, what is actually keeping that number down?
0:09:10 The CPI inflation is nearing the 2% target in several G7 economies, including the UK, France, Germany and the Eurora area. So that’s good news.
0:09:20 The good news in the US, I think, is that wages actually rose faster than inflation, meaning the purchasing power is actually starting to go up again reasonably. But I don’t know if that’s the case in Europe. I wonder what wages have done.
0:09:32 In the UK, that is the case. I haven’t seen the overall Europe data, but again, it’s only a recent trend. So much of the conversation around inflation gets so murky because it’s really about the time frame.
0:09:38 Are we looking at the monthly increase, yearly increase? Are we looking at the yearly increase as compared to the previous month?
0:09:47 So I just think when it comes to inflation, it’s very easy to see the headline number that says inflation’s coming down or inflation’s going back up again.
0:09:56 And we’re so quick to judge. But the reality is, if you care about this, I think the best thing to do is to just go to the National Statistics website in the US.
0:10:03 That would be the Bureau of Labor Statistics and read the whole thing for yourself because it’s always a bit more complicated than it seems.
0:10:13 Yeah. And so let’s get right to the fun stuff. Apple has reportedly stopped working on Vision Pro 2. This is shocking to me. This is just shocking.
0:10:28 I don’t see how anyone couldn’t have thought that putting a ridiculous gadget on your head that made you feel nauseous and made you even less attractive to potential mates, but only cost $3,500.
0:10:39 And it just infuriates me that people still aren’t willing to call this the ultimate stillborn technology. I mean, this thing never even crawled for God’s sakes.
0:10:46 I mean, this thing was literally DOA. And people, all these Apple acolytes, it’s okay.
0:10:55 All right, you can respect Starlink and still feel like, okay, but Elon Musk should not be spreading homophobic conspiracy theory.
0:11:01 You can say, all right, Apple’s an amazing product, but they haven’t cooperated with the government around child safety.
0:11:11 You can hold two ideas in your head at once. And these Apple acolytes, evangelist cultists refuse to believe that they’re going to get it wrong on certain pieces of hardware.
0:11:17 This thing never made any sense. They’re trying to pretend that, oh, we’re still going to have this.
0:11:26 They’ve basically, I’ll tell you, folks, you want to be fired. You want an easy way to get severance. Working at Apple on the Vision Pro is a good way to get severance eventually.
0:11:27 Very heartache.
0:11:35 We’re working at any media company that decides to spend money on X. These are literally the quickest way to a severance check.
0:11:37 So I’m, anyways, I’m shocked at, I’m shocked.
0:11:42 I mean, honestly, a very crucial question here. Have you ever tried any of these headsets?
0:11:43 Yeah.
0:11:44 Which ones have you tried?
0:11:51 I’ve tried the Meta. My 13-year-old was really excited about it and really wanted it. So we said, okay, you put half your money up.
0:11:53 So you bought one? Okay.
0:11:55 Right. Why wouldn’t I?
0:12:01 Dude, do you realize the shit I buy from my family? Like, I get to decide what they buy.
0:12:03 It’s like a ball snack for you. Yeah.
0:12:07 By the way, my kids suffer from device addiction and spend all day on fucking TikTok.
0:12:12 Do you think I have any influence over them? And then people will say, well, you’re the parent. It’s about good parenting.
0:12:15 Oh, fuck you. That means you don’t have children.
0:12:19 I love it when people say, oh, they shouldn’t be on social media. Just take their device away.
0:12:25 Okay. So let me get this. Let me get this. No one will have sex with you because you clearly don’t have kids.
0:12:27 You don’t know, you don’t know what this is like.
0:12:31 I just think it’s hilarious that people think my kids listen to me.
0:12:36 I love that. Yeah. And they’re really into World War II history and CrossFit. Not.
0:12:37 Anyways.
0:12:41 But you haven’t tried the Vision Pro, sounds like.
0:12:47 I put it on and I did that train set video where you get to see this amazing 3D train set. It really is.
0:12:48 Oh, yeah?
0:12:50 Yeah. Look, it’s incredible.
0:12:51 Where did you try it?
0:12:55 A good friend of mine has one. He has a Vision Pro and he put it on.
0:13:01 Yeah. I think it’s incredible. I think it’s absolutely amazing. I think IMAX is amazing.
0:13:08 When I first saw my film at IMAX, I’m like, wow, this is amazing. I go to IMAX once every two years and it’s a shitty business.
0:13:13 So they will let it die a slow death. It’s cool. They manage the press really well.
0:13:19 But this is stupid. As smart as Apple intelligence is, this was that stupid.
0:13:25 And like, and who predicted this first despite all the Apple people coming for me? Who predicted this first?
0:13:27 Oh, I don’t know. I have no idea.
0:13:37 Who predicted this? Who predicted every fucking Apple person like getting their knee pads out and blowing the Cupertino sphere and like, oh, it’s going to be amazing.
0:13:44 And it’s the future of computing. Give me a fucking break. Anyway, I don’t know why I’m so angry.
0:13:48 Okay. Well, let me just take the other side of this for at least a second.
0:13:51 Second over. This thing’s stupid.
0:13:52 Go ahead. I’m sorry.
0:14:04 Good minute. It’s pretty breathtaking. I think one great use case. I don’t know if you tried it, but they have the live sports feature where it’s this immersive experience where it literally feels like you’re in the stadium watching a live sports game.
0:14:16 That’s the potential of this. I mean, I just don’t see any reason why anyone wouldn’t, given the choice, choose the immersive feature with the Vision Pro to watch a live sports game, then just looking at it, watching the game on a flat screen.
0:14:26 Having said that, I think there are two main huge issues for me that you kind of bring out. One was the thing was way too heavy. It’s like uncomfortable. My neck got tired.
0:14:40 And two, it’s way too expensive. It’s three and a half thousand dollars plus tax for something that is at most like a fun gadget, which is why I do think it’s interesting that they’re not working on upgrading this edition of the Vision Pro,
0:14:49 but they’re working on a new Vision Pro headset still, which is one lighter and two half the price. It’s going to cost one and a half thousand dollars.
0:14:57 And if both of those things are true and they don’t sacrifice on quality, I might buy it. I think I will buy it actually.
0:15:14 Despite the immersive experience, which will wow you, I still think you will opt for either watching it on the flat screen on your computer or actually going to the game. I don’t know if this really… We’ve been talking about these immersive experiences.
0:15:15 We have for years.
0:15:31 You know, all those video parks where you put on a headset and you’re flying through space and they have fans blowing in your face. That’s when my kids go, they go to the technology for inherits or at Selfridges and they get on something where they’re Superman and they have wind in their face and they’re flying through space.
0:15:33 Isn’t the stuff amazing down there in Selfridges?
0:15:34 It’s pretty nice.
0:15:36 They always have the craziest gadgets I’ve ever seen.
0:15:52 No, it’s great. And then we go have dimsum and dimtie, f*ck or whatever. I was ordered the cream of s**t. I love it. You just got that. Welcome Ed. Welcome. Anyway.
0:15:56 Okay, so, headsets.
0:16:00 Let’s talk about… No, no, no. Let’s call it. Let’s talk about it in the video now.
0:16:12 Okay, look, I can’t get over this thing. I can’t get over this thing. I looked up what is the global value of the automobile industry and it’s like 1.4. The top 10 automobile companies including Tesla are worth 1.4 trillion.
0:16:29 This company has added that and the GDP of Sweden in the last 12 months. This company is an extraordinary example. I think of where the economy is headed. The thing I don’t like about this or the thing I think we have to be thoughtful around is that if you look at the Nasdaq,
0:16:45 this company is now responsible for something like 45 or 50% of the Nasdaq’s gains for the year. And I hate the Nasdaq and the S&P indices because they give people the illusion and it is an illusion that the economy is really strong.
0:17:02 Really what they are at the end of the day is they are indices on the super rich because the super rich own a disproportionate amount of the stocks. And spoiler alert, the super rich are killing it. They’re at all time highs. In the last 10 years, we’ve gone from 500 billionaires to 2,500.
0:17:16 So I worry a little bit that this really is a bit of a, not only a distraction, but it’s an unhealthy distraction that mass over some of the bigger issues that ALS. What are your thoughts on it?
0:17:29 Well, I think the statistics are just staggering. Four years ago, this company was barely in the top 50 largest companies in the world. It’s now worth more than the entire UK stock market. It’s now worth more than the entire French stock market.
0:17:47 But the thing I’ve been thinking about is, you know, no one is happier about this than the employees of NVIDIA who probably joined this company a few years ago, thinking they were going to join this kind of somewhat known, decent middle to upper tier tech company.
0:17:59 And suddenly they are the superstars who are being rewarded basically as if they are the founding employees of a startup that’s about to go public. And to illustrate this, Mia found this great stat.
0:18:11 If you joined this company five years ago, say as like a mid-level project manager. And at that level, it’s pretty reasonable to assume that you’d be getting a stock grant of around $70,000 over four years.
0:18:22 So assuming that five years ago, $70,000 stock grant, that initial grant today is now worth ten and a half million dollars.
0:18:31 So I would bet that there are hundreds, maybe thousands of employees in this exact position who have basically been made millionaires overnight.
0:18:48 And if we can take this a step further, if you look at the workforce, there are roughly 30,000 employees at the company overall. It’s got a market cap of $3.3 to $3.4 trillion, which means that the market cap per employee of this company is $113 million.
0:18:55 That’s six times higher than Apple. It’s eight times higher than Microsoft. It’s one of the highest in the world.
0:19:10 Wait, $113 million per employee. Jesus Christ. That number is staggering. I spent the better part of seven or eight years working around the clock on a company benchmarking digital competence.
0:19:18 Came up with this really interesting indices. Just everything lined up. It was a great core group of employees, great clients.
0:19:27 We cornered the luxury market for digital benchmarking. All the moons lined up. We got a bidding war mowing, and I sold this company for $158 million.
0:19:34 We had, I think, 80 or 100 employees. So that’s $1.6 million per employee, not $113 million.
0:19:42 So basically, one employee at NVIDIA has created the market cap of just slightly less than the entire company fell pale.
0:19:51 And let me move to financial advice. Anyone at NVIDIA that is listening to this podcast, listen to me very closely.
0:19:59 Sell. Now, okay, and let me acknowledge the stock might double. It doesn’t matter.
0:20:11 If you have more than 90% of your net worth and more than a million dollars in this company, and this is what I didn’t learn, you need to diversify because this company could go down easily.
0:20:26 Easily, easily 80%. It might double. But the pain of losing, of going from being worth $5 million, right, to $1 million, is much more severe than the joy of going from $5 million to $10 million.
0:20:34 So you have thousands of employees that have millions, even tens of millions of dollars that are highly concentrated.
0:20:48 And you want to remember what Kahneman wrote about loss aversion theory. This needs to be a win for you. Take as much off the table as you can, as you can, and hope you’re wrong.
0:20:56 Leave a little in the company, fine. And I hope I’m wrong for you. But you want to make sure this is a win no matter what.
0:21:11 And I could have sold in 1998 when I was 33 years old, I could have sold 10, 15, 20 million dollars in red envelope stock, stuck that away, and had economic security for the rest of my life.
0:21:20 But instead, I’m like, no, this company is amazing, and I’m amazing, and I’m devoted to this in the market’s champagne and cocaine. Don’t be stupid, Scott Galloway.
0:21:27 Be smart here. Take some, if not most, off the table.
0:21:31 We’ll be right back after the break with a look at Netflix’s take on theme parks.
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0:21:59 I know that personally, I feel fortunate that I’ve gotten to spend so much time with my boys. We’re going to football games, and I’m kind of a yes to anything with the rights to back out with friends.
0:22:05 But I’m trying to just be open to stuff, get out of the house more and be more social. All that good stuff.
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0:24:30 We’re back with ProfG Markets.
0:24:35 Netflix is opening two experiential entertainment venues in 2025.
0:24:37 The complexes will be called Netflix houses,
0:24:42 and they’ll take up more than 100,000 feet of former department stores in Dallas and Philadelphia.
0:24:48 Netflix houses will feature events, games, restaurants and stores designed to immerse customers in the worlds of Netflix content,
0:24:52 and these venues represent Netflix’s largest leap into live experiences to date.
0:24:57 Scott, it appears that Netflix is taking a page out of Disney’s book,
0:25:00 who have invested heavily in parks and experiences.
0:25:02 What do you make of this move from Netflix?
0:25:07 I think Netflix is thinking, should we explore becoming Disney before Disney becomes us?
0:25:14 And that is, Disney is gone, not all in, but they’re taking a lot of that 10 billion in EBITDA and pouring it into their streaming group.
0:25:19 I think they’re one of the streamers that survives because they have such great IP and such singular positioning around family.
0:25:24 And Netflix has developed such unbelievable IP. It rivals Disney’s IP.
0:25:29 Netflix has created Stranger Things, Bridgerton, Umbrella Academy.
0:25:32 You know, I see pop-ups for Stranger Things.
0:25:37 I can see afternoon tea with Bridgerton, where people come in and corsets and then start fucking.
0:25:40 That’s what I’d like to see.
0:25:43 But Stranger Things, you can see like a haunted house for Stranger Things.
0:25:47 And my guess is, one, it’s probably good for the brand at a minimum.
0:25:50 It’ll create some excitement. They’ll get a lot of press.
0:25:54 And if it ends up that this thing has staying power and it becomes a choice,
0:26:01 they’re really, you’re assuming at some point you actually mate and you have children,
0:26:05 which I’m doubtful around if I read the stats around young men.
0:26:11 But assuming that happens, you’ll find there really isn’t a lot to do with your kids.
0:26:15 And I remember my dad picking me up on weekends.
0:26:19 He used to come to my pick me up for my mom’s every other weekend.
0:26:21 I’d get in the car and he’d say, how’s your mom?
0:26:25 I’d be like fine. And then there’d be a pause and he’d say, that bitch.
0:26:29 Anyways, anyways, little memory, little walk down memory lane.
0:26:36 But other than taking me to LA Kings games to watch Marcel Dion and Whitey Whiting and Rogi Vachon.
0:26:40 These are great hockey players you’ll never think of again.
0:26:44 He would have to take me to the movies. There was just nothing to do with a kid.
0:26:47 And I think there’s just a huge economic opportunity here.
0:26:52 So, I mean, I can tell you if the Netflix thing opens and there’s an umbrella academy thing
0:26:55 and there’s a stranger things, I mean, where the Galloway’s are going to be there
0:26:57 and we’re going to spend a lot of money there.
0:27:00 And if they find it’s sustainable and that they can, you know,
0:27:04 it’s not just a one-time sugarhead like the Museum of Ice Cream, right?
0:27:06 Eventually, you know, that’s going to go away, right?
0:27:10 Where you explore your creativity by jumping into a ball pit and then eating pistachio ice cream.
0:27:14 Yeah, that was worth my $38. That was money well spent.
0:27:16 Anyway, it’s only $38. That’s cheap.
0:27:21 I am so convinced that this is graduates of NYU’s Gallatin School that do a lot of edibles.
0:27:24 And they’re like, in the middle of watching South Park, really high.
0:27:26 What if we open something like the museum?
0:27:30 This is a real thing in New York. There’s a museum of color.
0:27:34 And you walk into a room and you give your personality traits and it says,
0:27:38 “Oh, you’re Chartreuse.” They’re like, “Oh, wait, I’m Chartreuse.”
0:27:40 And it tells you what color you are.
0:27:43 And you’re like, and you all talk to each other and you think that there’s some sort of insight there.
0:27:44 Anyway.
0:27:46 The key detail, though, is that you have been to both.
0:27:50 It sounds like you’ve been to the Museum of Color and the Museum of Ice Cream.
0:27:52 When you have kids, you’ll go to all of them.
0:27:53 You’ll take anything.
0:27:56 You’ll literally go to all of them. And that’s the opportunity here.
0:27:58 So if they could, one, it’s great marketing.
0:28:01 And two, potentially, they could say, “You know what?
0:28:07 We’re going to reinvent Disney instead of buying maybe seven million acres in Orlando
0:28:11 and getting into fights with, you know, Joey Bagadon, its governor.
0:28:16 We’re going to develop these things in urban centers, reinvent the theme park concept,
0:28:21 and it could be this multi-channel and leverager IP and start to get a little bit of that flywheel.”
0:28:24 You keep on saying the unbelievable IP.
0:28:27 I mean, stranger things maybe, Squid Game maybe.
0:28:30 You mentioned Umbrella Academy. I haven’t even heard of that.
0:28:32 Again, see above doesn’t have kids.
0:28:34 Okay, fair enough.
0:28:40 But I mean, you compare this to the Disney assets, like, you know, Star Wars, Pirates of the Caribbean.
0:28:46 Frozen, Toy Story. These are like iconic, iconic IP assets.
0:28:53 Do you really think that Money Heist holds a candle to any of those Disney assets?
0:28:58 And do you think it’s legitimately durable enough to build a park around?
0:28:59 I think they’ve got a lot.
0:29:02 I think you underestimate the power of their IP and how many niches are out there
0:29:05 that they’ve really definitely exploited.
0:29:12 You might be right, and they might find they just don’t have the depth of, you know, what I think is.
0:29:19 My favorite would be as if they did a special ride for Dahmer, the monster, the Jeffrey Dahmer story.
0:29:24 They’re going to have to do a bunch of rides about the bajillion documentaries they’ve put out in the past two years.
0:29:29 It’s like, if you have to ask what’s for lunch, that means you’re for lunch.
0:29:31 Oh my God, Wednesday?
0:29:34 Well, let’s just stay on up for one more second.
0:29:36 I mean, let’s compare it to Disney’s business.
0:29:40 So Disney’s Parks and Experiences Unit is a great business.
0:29:43 They brought in $8.5 billion in revenue last quarter.
0:29:45 That’s 40% of their overall revenue.
0:29:51 As a percentage of their operating income, it’s 60%, so it’s highly profitable.
0:29:59 Having said that, Netflix appears to be making a different move here, and that is they haven’t called it a theme park.
0:30:03 They’re specifically calling it this experiential entertainment venue.
0:30:07 And so it’s not clear that there’s going to be actual rides.
0:30:10 It’s going to be more of, you know, hanging out at the mall.
0:30:15 And there are, you know, stranger things, themed events, but it’s not a theme park.
0:30:20 So I’m just, we’d like to get your take, your strategy take.
0:30:27 Why do you think they’re trying to differentiate themselves from the theme parks that Disney have proven work?
0:30:29 And how do you think it’s going to be different from Disney?
0:30:33 This is the kind of thing we used to get paid to figure out at profit.
0:30:35 You know, they come to us with questions.
0:30:39 What if Netflix were to open some sort of theme park question mark and come back to us?
0:30:42 And the pain points, first off, what are the pain points at Disney?
0:30:47 One, it’s extraordinarily expensive, extraordinarily expensive, right?
0:30:53 To take a family of four to Disney in the hotels, you’re looking at five to ten grand.
0:30:58 Two, it’s the seventh ring of hell in terms of time cost.
0:31:00 You can’t really go for one day.
0:31:05 When you have a line for three hours for the Avatar ride, it’s not really accessible either.
0:31:08 It’s in, you know, it’s not in the city center.
0:31:15 They need huge swaths of land outside of, you know, in a suburb of Orlando or Paris or Tokyo.
0:31:20 So one, smaller, cheaper and cheerful, something maybe you can go in and get out in two hours,
0:31:25 maybe three hours, something that costs a hundred or two hundred bucks for a family of four,
0:31:27 not five to ten thousand.
0:31:31 So I think there’s a lot of pain points that they could solve.
0:31:36 Where they say, okay, how do we give people 30, 40, 60% of the Disney experience
0:31:40 for 10% of the price and 5% of the time commitment?
0:31:43 So I think this is really brilliant.
0:31:47 I don’t know if it’s going to go anywhere, but like I said, this is, what is scenario planning?
0:31:53 Scenario planning is trying to develop a strategy that across a number of scenarios has the best outcomes.
0:31:54 It’s not predicting the future.
0:32:00 It’s saying, all right, let’s look at three or four possible futures and then develop a strategy that fits best
0:32:04 and has the best outcome across all of these potential futures or the majority of them.
0:32:10 So one, it’s a cute idea, and it gets some awareness and some press, but it’s not really a sustainable business.
0:32:12 All right, don’t spend too much on it.
0:32:15 Open it, short-term leases, position it as a short-term thing.
0:32:19 So people don’t start shitposting you, like me, if you’re the Apple Vision Pro 2.
0:32:24 Don’t say we’re going, we’re going to try and create the next Disney Parks, but be better.
0:32:26 No, just say it’s a marketing thing.
0:32:27 We think we’re experimenting.
0:32:29 And then what if it’s big?
0:32:36 Well, we’re in a position with our IP to really go crazy with it and we’ll immediately start looking at locations all over the world.
0:32:39 These things could be hugely profitable.
0:32:44 I went, oh my God, I went to life-size monopoly in London.
0:32:45 Think about that.
0:32:47 Think about how desperate parents are.
0:32:53 You go to this place where the guy in the top hat and all these characters from monopoly.
0:32:54 No.
0:32:59 And you roll a giant dice and then you have to have, and then you have challenges with strangers.
0:33:04 And these people with thick accents from the north of England, you’re like, what the fuck are they saying?
0:33:07 I’m supposed to work with these people and your kids get really into it.
0:33:15 And you do these games and you pay 50 bucks and then you go downstairs and maybe they order you like a ham and cheese sandwich for 18 quids.
0:33:16 It sounds miserable.
0:33:18 And you’re like, oh, that was fun.
0:33:19 That was fun.
0:33:25 And you’re like, just get them home and get them in bed so we can start drinking.
0:33:32 But there’s a lot of opportunity in the space for kids because it is on weekends.
0:33:34 It is, especially with little kids.
0:33:35 Slim picking.
0:33:37 It is difficult.
0:33:41 We’ll be right back after the break for Scott’s takeaways from the Cannes Lions Festival.
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0:36:51 We’re back with Prodigy Markets.
0:36:54 Scott, you’ve been at Cannes Lions all week, an international festival
0:36:56 where thought leaders from the advertising industry get together.
0:37:01 It is essentially the Oscars of advertising, except it’s set in the French Riviera.
0:37:05 Can you share just some of your main takeaways from this festival
0:37:08 and especially your thoughts on the state of advertising right now?
0:37:12 Well, first and foremost, I went to the Yahoo party with the chain smokers,
0:37:15 and I didn’t realize, but the chain smokers are not a band, they’re DJs.
0:37:16 That’s right.
0:37:18 And they’re also very nice guys.
0:37:19 And they’re VCs.
0:37:21 And they’re starting a venture capital fund.
0:37:23 And they’re also like the most lovely people.
0:37:26 I was literally, I’m bragging a little bit, I was with the band
0:37:27 and we couldn’t get in.
0:37:28 It was so mobbed.
0:37:31 There were so many, there was literally 2,000 people trying to get in
0:37:34 to see the chain smokers that even though I was with the chain smokers,
0:37:36 I could not get in.
0:37:37 What do you mean you were with them?
0:37:38 You were just hanging out?
0:37:39 I know.
0:37:40 It’s Alex and what’s his name?
0:37:41 I don’t know their names.
0:37:43 Chain and Smoker.
0:37:44 I don’t know.
0:37:45 I don’t know their names.
0:37:47 They’re super nice guys with super hot girlfriends.
0:37:48 That’s all I could register.
0:37:50 Anyways, can’t.
0:37:53 First, it’s really can as a conference.
0:37:55 It’s the only conference I’ve been to over here for 10 years.
0:37:56 It’s actually growing in importance.
0:37:58 And a lot of non-traditional companies are showing up.
0:38:01 So there was this, the hottest beach was something called Sports Beach.
0:38:04 And all of these sports firms are becoming media companies.
0:38:07 The Kelsey guys, that guy came up and hugged me.
0:38:10 And he was standing that Paul revealed that Michael,
0:38:13 literally the Michael Jordan of La Crosse, who’s I would call a friend said,
0:38:14 “Do you want to come to Sport Beach?”
0:38:15 I’m like, “Yeah, take me in.”
0:38:18 And this enormous bear of a man with a big beard came up and hugged me.
0:38:20 And it was the Kelsey guy that’s retiring.
0:38:22 I know nothing about football.
0:38:24 And his agent offered to bring me and my sons to a camp.
0:38:25 And they couldn’t be nicer.
0:38:27 I’m sitting there looking at these two.
0:38:30 And I’m like, “These two are a different species.”
0:38:31 That was my first observation.
0:38:34 Like I can’t believe I’m part of the same genome as these guys.
0:38:40 Anyways, the LA Rams are at can in force.
0:38:45 And it just struck me that marketing and brands are having a bit of a resurgence.
0:38:47 And people want to come here.
0:38:50 And I think it’s wonderful because the entropy,
0:38:53 the serendipity of running into people and saying,
0:38:55 “Hey, do you want to grab a latte?”
0:38:56 I ran into so many people.
0:38:59 I ran into former students and everything’s like,
0:39:00 they’re guard and the screen is down.
0:39:02 I ran into a former student who said,
0:39:03 “Do you want to grab a glass of water?”
0:39:04 I’m like, “Yeah, sure.”
0:39:07 And we caught up and it’s like the most lovely woman and she’s working at Roku.
0:39:09 And that happens like 10 or 20 times.
0:39:10 It’s really wonderful.
0:39:11 They do a great job.
0:39:13 The South of France is extraordinary.
0:39:17 But I think the biggest stories coming out of can will be amongst the following.
0:39:22 One, the Musk-Yakarino Apology Tour,
0:39:27 which I think is going to go over as well as if Millie Vanilly showed up at the Spotify beach
0:39:30 and rushed the stage and tried to sing.
0:39:35 I’ve been joking and I’ve been saying this all week,
0:39:37 which I’m sure didn’t help things.
0:39:40 You know, I’ve been a total whore speaking at everything.
0:39:41 These people love abuse.
0:39:43 I’m like, you’re all going to be out of fucking work.
0:39:44 Why are you here?
0:39:46 Anyway, and they keep inviting me back.
0:39:51 Anyways, I’m like, would anyone like to join me for a glass of rosé at Twitter Beach?
0:39:55 They’ve renamed it the Nazi porn de plage.
0:39:58 And so I just don’t think that’s going to work.
0:40:00 And the question I’ve been asking everyone at this conference is,
0:40:03 how are you more likely to get fired?
0:40:05 Okay, and I’ll give you three options.
0:40:09 Putting in the communal refrigerator, you know, in a snack room,
0:40:13 mushroom chocolates and saying property of Ed Elson,
0:40:16 referring to your assistant as jiggles,
0:40:23 or, or, or deciding to advertise on X where you might,
0:40:26 you might end up next to a swastika and then they call you in and say,
0:40:29 this is really bad for the Sesame Street brand.
0:40:31 Why did you decide to do this?
0:40:34 This is really bad for Cheerios to be next to a swastika.
0:40:36 And you go, well, it’s, it’s Twitter.
0:40:38 I thought we’d be fine.
0:40:39 Okay, you’re fired.
0:40:42 This is the dumbest brand.
0:40:46 If you’re looking, literally, if you’re looking to be fired and I said this,
0:40:50 be on the vision pro team or decide to spend money on Twitter.
0:40:53 I think the apology tour will probably be the biggest story that didn’t work.
0:40:55 Did people, sorry, did, did people agree?
0:41:00 I agree with you with that take, but do you think the advertising industry generally agrees?
0:41:02 Like, yeah, we’re totally staying away from X.
0:41:04 It’s just, it’s a porn site now.
0:41:05 I think people want to forgive Elon Musk.
0:41:06 It’s interesting.
0:41:08 Someone pointed out to me that he’s got a much stronger,
0:41:10 he’s got much more goodwill outside of the U.S.
0:41:14 So Twitter has declined by about 75% in revenue in the U.S.
0:41:18 It’s, it hasn’t declined at all in Japan and it hasn’t declined as much in Europe.
0:41:21 His brand, he’s much, actually, much better like outside of the U.S.
0:41:23 and is inside of the U.S.
0:41:26 Some people have said to be fair that small and medium sized business now
0:41:29 that the prices have come down because no one wants to advertise there,
0:41:33 that it is a good, a decent ROI medium for a quote unquote smaller brand
0:41:35 that’s maybe not as worried about brand safety.
0:41:40 I mean, keep in mind, if you’re a unilever, if you’re a unilever, you have a good job.
0:41:42 You basically just don’t want to get fired.
0:41:45 It’s like, okay, be smart, hire talented people, talented agencies,
0:41:48 which they have access to, and don’t fuck up.
0:41:52 And so these smaller brands probably can target more niche audiences.
0:41:57 It might have a second life there, but like, I just don’t think it works.
0:41:59 I think she comes across is just…
0:42:00 Was she there?
0:42:03 I was surprised he didn’t just send her, his pet CEO.
0:42:05 Well, but she’s not a CEO.
0:42:07 That’s why I call her his pet.
0:42:10 She’s a full-time cultist, apologist, trying to…
0:42:14 She’s literally the circus clown behind an elephant scooping up his shit.
0:42:18 And it’s just so pathetic to watch.
0:42:19 That’ll be the number one story.
0:42:22 The number two story is weird, and that is…
0:42:26 I’m friends with a guy named Michael Kasten, who is literally the mayor of Cannes.
0:42:28 He had a company called MediaLink that would basically…
0:42:30 It was kind of like the mafia.
0:42:34 If you were a small up-and-coming tech firm that wanted to sell into brands and everything,
0:42:37 he’d say, “Okay, give me $100,000, and I’ll take you to a boat party.”
0:42:40 And he’d throw parties, and the only people that could come in were clients of his.
0:42:44 It was a total mob thing, but he’s a nice man.
0:42:46 And for some reason, he’s always been really generous to me.
0:42:48 I’ve never been a client of his.
0:42:50 I’ve never paid him any money.
0:42:56 But I spoke on a panel actually with him actually just a few hours ago at that…
0:42:57 I think it was called the Collins House.
0:43:01 These two really nice people have a brand innovation firm, whatever it is.
0:43:04 Anyways, and so Michael’s always been really nice to me.
0:43:09 But Michael basically had a falling out with a UTA who bought MediaLink.
0:43:11 He was unceremoniously fired.
0:43:13 He’s then filed a defamation suit against them.
0:43:18 Michael is launching a new firm and decided to have the launch dinner on the deck,
0:43:22 overlooking MediaLink’s biggest party.
0:43:27 I think it’s literally like little Sarah crashes Rachel’s bot mitzvah because she wasn’t invited.
0:43:29 Well, how good was the dinner?
0:43:30 It was fine. I like Michael.
0:43:32 It’s a hotel to cap. It’s great.
0:43:37 But I immediately went down to see Lenny Kravitz play at the I Heart Media Party because that was cooler.
0:43:39 The party you weren’t invited to?
0:43:41 Oh, by the way, I should shout out.
0:43:42 Are you a security?
0:43:43 No, I should shout out.
0:43:45 I Heart Media could not be more generous and nicer to me.
0:43:49 And Bob Pittman and his assistant Sidney made sure that I was taken care of.
0:43:50 I was ribbing them.
0:43:53 Thank you. Thank you. Thank you.
0:43:55 All right, enough of that bullshit.
0:43:57 Because you complained that they listened to the podcast?
0:43:58 Yeah. What happened?
0:44:00 Ed, I’m not exaggerating.
0:44:01 Everyone listens to this thing.
0:44:03 Everyone’s coming up and going, how old is that?
0:44:05 How old is that Ed Elston?
0:44:07 And they’re like, you know, anyways.
0:44:14 But Michael Cassin, the question I asked, I said this on this panel, would a CEO with ovaries have done this?
0:44:17 I think there’s a difference between male and female leadership.
0:44:19 No woman would have done this.
0:44:23 It was just like, I literally said to them, this is the definition of a dick move.
0:44:24 Yeah.
0:44:25 You don’t get in the way there.
0:44:27 You don’t get in the way of their party.
0:44:28 Exactly.
0:44:30 Just whatever boss, compete against them, but don’t get in the way.
0:44:33 But anyways, I do like Michael and he’s been very generous to me.
0:44:42 And then I also think the story that is sort of overhanging everything, but may or may not be written, is that the most valuable company in the world isn’t here.
0:44:53 And I really appreciate that because Metta used to come here and pretend to be the partner to the media world and run their fingers through their hair before they shot them in the fucking face.
0:44:56 And NVIDIA could own the whole fucking thing.
0:45:07 I mean, NVIDIA could just say, I know, let’s take $100 million or yesterday’s share appreciation between 330 and 331 and own it.
0:45:19 And they’re not even pretending that they’re your friend because the reality is if you think about an industry that’ll probably are a job that’ll be disrupted at the low end, it’ll probably be like a low-level media planner.
0:45:23 I would think that AI is going to be able to just get all over efficiency around media planning.
0:45:28 Which I wanted to ask, are people concerned about that or how are they positioning AI?
0:45:37 Are they like, oh, this exciting new technology was so excited for how it’s going to enhance the advertising industry or are they all kind of freaking out like, oh shit, AI can do our jobs?
0:45:44 Well, when you’re in Cannes and everyone’s speaking publicly and no one wants to piss off a potential partner, they’re like, oh no, Google’s a partner.
0:45:47 We see a lot of opportunity to partner with Google.
0:45:51 I mean, they’re all such Vaseline over the lens.
0:45:55 I think that’s why I get invited here is I literally stand out because I’m like, are you fucking crazy?
0:46:01 Come on, they’re literally serving you your last meal and asking you to pay for it.
0:46:07 Anyway, everything here is sunshine and roses and rainbows, right?
0:46:14 That brands are coming back, media spending is up, and AI is going to be good for us.
0:46:18 So it’s definitely not, it’s a celebration.
0:46:22 This is more a convocation and a gore and a chance for people.
0:46:26 And I think this is really important to see, touch, and feel each other.
0:46:29 And I think that we’re desperate for that coming out of COVID.
0:46:31 And it’s in a beautiful part of the world.
0:46:34 But I think Nvidia, I feel like, is overhanging everything.
0:46:37 Any discussion of TikTok and the potential ban?
0:46:39 Was anyone worried about that?
0:46:42 It’s interesting, TikTok has a pretty big presence here.
0:46:45 And maybe because I’m not that dialed in, I haven’t heard a lot.
0:46:50 TikTok doesn’t invite me to their TikTok beach, surprisingly enough.
0:46:54 So I haven’t heard, we didn’t talk a lot about TikTok.
0:46:56 It’s interesting you say that, not a lot of people brought up TikTok.
0:47:00 Everyone’s talking about AI, full stop.
0:47:03 And also just sports, and that was a big theme here.
0:47:05 Just the power of sports marketing.
0:47:09 But no, I haven’t heard a lot of people talk about TikTok.
0:47:13 But I’ve noticed two years ago, either my brand is waning
0:47:15 or people are worried about what I’m going to say.
0:47:18 But I was invited to three panels this time.
0:47:21 I usually get invited to several panels every day.
0:47:24 So maybe I’m losing my luster.
0:47:25 I don’t know.
0:47:27 I probably fucked up doing this pot with you.
0:47:28 That’s probably what this all says.
0:47:29 No, it’s not that.
0:47:32 I think it’s probably because you’re telling everyone that brand is dead.
0:47:34 They still seem to just lap it up though.
0:47:35 They just love it.
0:47:37 They just love getting slapped.
0:47:39 They’re like, “Thank you, sir. May I have another?”
0:47:44 All right, let’s take a look at the week ahead.
0:47:48 We’ll see data on the personal consumption expenditures index for May.
0:47:50 And we’ll also see earnings from FedEx and Nike.
0:47:52 Do you have any predictions for us?
0:47:55 Well, I’ve just been thinking a lot about the exchange wars.
0:48:01 I think it’s fascinating this Texas exchange and Raspberry Pi going public on the LSE.
0:48:02 I think you’re going to see…
0:48:03 I think the biggest…
0:48:04 Talked about this.
0:48:07 The biggest IPO of this year is going to be Sheehan on the LSE.
0:48:13 And then the biggest IPO of 2025 is going to be SpaceX on the Texas exchange.
0:48:16 And I think it’s going to set off a bit of a war.
0:48:17 I think it’s healthy.
0:48:19 I think it’ll bring down costs.
0:48:22 It’s good that the NYC and the NASDAQ are going to have competition.
0:48:26 But my prediction for 2025 is what I loosely refer to as exchange wars.
0:48:33 As the biggest IPOs of 2024 and 2025 are on the LSE and this new Texas exchange,
0:48:37 specifically Sheehan and SpaceX respectively.
0:48:41 This episode was produced by Claire Miller and engineered by Benjamin Spencer.
0:48:43 Our associate producer is Alison Weiss.
0:48:45 Our executive producer is Jason Stavins and Catherine Dillon.
0:48:49 Mia Silverio is our research lead and Drew Burrs is our technical director.
0:48:52 Thank you for listening to ProfG Markets from the Vox Media Podcast Network.
0:48:57 Join us on Thursday for our conversation with Ben Miller only on ProfG Markets.
0:49:03 Lifetimes
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0:01:20 I’m Scott Galloway and this is No Mercy, No Malice.
0:01:24 One sign that the business cycle has reached a full bubble.
0:01:27 When companies begin washing their brands
0:01:29 in the flavor of the moment.
0:01:32 Right now, that flavor is AI.
0:01:35 And predictably, just about every company
0:01:39 wants the market to believe it’s an AI company.
0:01:43 AI Washing, as read by George Hahn.
0:01:49 I’m at Cannes, hungover as I went to Yahoo Beach
0:01:50 and saw the chain smokers.
0:01:54 Cannes is everything I wanted in my 20s and 30s
0:01:56 but didn’t have access to.
0:01:58 Since I was working all the fucking time
0:02:00 and had no money or influence.
0:02:01 Better late, I guess.
0:02:04 Anyway, the two biggest stories
0:02:08 of this year’s Cannes Advertising Conference will be,
0:02:12 one, the Musk-Yakarino Apology Tour,
0:02:14 which received a slightly cooler reception
0:02:18 than if Millie Vanilly showed up at Spotify Beach.
0:02:21 No, Elon, really, you can go fuck yourself,
0:02:23 says the ad community.
0:02:26 Two, my friend Michael Casson,
0:02:29 hosting the kickoff dinner for C3, his new firm,
0:02:31 on the terrace overlooking the party
0:02:34 for MediaLink, his former firm.
0:02:39 Pro tip, CEOs with ovaries don’t do this shit.
0:02:41 The definition of a dick move.
0:02:46 I said this verbatim on a panel with Michael yesterday
0:02:50 and he responded, you mean a big dick move.
0:02:53 But I digress.
0:02:57 The best founders articulate a vision of the future
0:03:01 and put their company’s business model at the heart of it.
0:03:03 It’s no different from Hollywood.
0:03:04 The sets and costumes change,
0:03:08 but the promise of a utopian or dystopian future
0:03:09 is a constant.
0:03:14 By the way, the headline that best depicts our world would be,
0:03:18 on average, things modestly better today, globally.
0:03:20 But that’s click-repellent.
0:03:24 Ironically, the hot movie trends seem to be biopics
0:03:27 about business, specifically successful products.
0:03:31 Studio execs recently greenlit movies about Blackberry,
0:03:34 Tetris, The Air Jordan, and presumably after Edibles,
0:03:37 Spicy Cheetos and Pop Tarts.
0:03:39 As the financialization of everything,
0:03:42 which has CEO signing breasts,
0:03:44 becomes a category seven hurricane,
0:03:49 expect an onslaught of movies about AI as UberVillain.
0:03:52 In the latest Mission Impossible installment,
0:03:53 Dead Reckoning Part One,
0:03:56 the villain is a sentient AI entity called,
0:03:58 wait for it, the entity.
0:04:00 I’m working on a film myself,
0:04:04 and given my Hollywood career, it will be in theaters soon.
0:04:06 Maybe.
0:04:09 In America, money is relevance,
0:04:11 and the most relevant thing in the world
0:04:15 is now a firm that designs GPUs.
0:04:19 NVIDIA has registered the greatest market cap growth
0:04:24 in history, $2 trillion in the past year alone,
0:04:29 becoming briefly the most valuable company in the world
0:04:34 as its chips are the literal heart of the AI revolution.
0:04:37 No storytelling required.
0:04:40 I appreciate that the folks from NVIDIA don’t come to Cann,
0:04:42 unlike Google and Metta,
0:04:45 to run their fingers through the hair of media execs
0:04:47 before shooting them in the face.
0:04:49 My favorite Cann moment?
0:04:52 Cheryl’s 2013 book signing,
0:04:54 which attracted hundreds of female execs,
0:04:58 even as her firm was depressing millions of teen girls.
0:04:59 Back to NVIDIA.
0:05:02 Think about this.
0:05:06 One company has added the value of the global auto industry
0:05:11 and the GDP of Sweden in 12 months.
0:05:13 Open AI and by extension,
0:05:17 its sugar daddy, Microsoft, are similarly benefiting.
0:05:19 But investor hunger for AI stories
0:05:23 can’t be sated by a few businesses.
0:05:25 CNBC makes an annual list
0:05:28 of the 50 most disruptive companies
0:05:32 and two thirds of the entrance on the 2024 list,
0:05:35 quote, describe artificial intelligence
0:05:38 as critical to their businesses, unquote.
0:05:43 The key word in that sentence is describe.
0:05:47 Every comms exec and CEO who can spell AI,
0:05:49 i.e. all of them,
0:05:54 has decided AI is the protagonist of their company’s story.
0:05:57 However, similar to Game of Thrones,
0:05:59 a lot of these leading men and women
0:06:02 aren’t going to make it to season two,
0:06:05 which brings me to Tempus.
0:06:08 I mean Tempus AI.
0:06:13 Tempus is a genomic testing and data company.
0:06:17 Doctors take blood or tissue samples from patients
0:06:19 and send them to a Tempus lab.
0:06:21 And Tempus sends back information
0:06:24 about the genes it finds in those samples.
0:06:28 In addition to testing, Tempus licenses the data it collects
0:06:30 to pharmaceutical companies
0:06:33 who use it to develop drugs.
0:06:35 Tempus specializes in cancer,
0:06:36 which is a great business
0:06:39 as fighting cancer is a noble thing.
0:06:42 AI, healthcare, cancer, disco.
0:06:45 I emailed the CEO who might sort of know,
0:06:47 strikes me as an impressive guy,
0:06:49 and asked if I could invest.
0:06:52 He said they’re only letting institutions invest.
0:06:54 Makes sense.
0:06:55 I was still interested however,
0:06:57 so I looked further into the firm.
0:07:00 Read, I asked my team to look into the firm.
0:07:02 And here’s what we found.
0:07:04 It’s not such a great business
0:07:06 in the sense of making money.
0:07:09 Tempus doesn’t make money, it burns it.
0:07:12 Since its founding in 2015,
0:07:16 the company has raised $1.5 billion in venture money
0:07:19 and spent almost all of it.
0:07:22 According to its IPO filing,
0:07:27 Tempus had $80 million left in the bank on March 31.
0:07:30 And it was burning $8 million per week,
0:07:35 suggesting it would run out of cash last week.
0:07:38 The company raised an additional $200 million
0:07:40 from SoftBank in late April,
0:07:44 otherwise it might not have made it to the IPO.
0:07:48 I’m wondering when the CIA is going to plant SoftBank,
0:07:52 Chimoth Polyhapitia, and Cathie Wood in Moscow
0:07:54 to take the Russian economy down.
0:07:59 Tempus AI stumbled across the IPO finish line
0:08:01 and fell into a pile of money.
0:08:06 It priced at $37, opened at $40,
0:08:11 and hit $44 before settling at $38,
0:08:14 giving the company a $6 billion market cap
0:08:17 after a day of trading,
0:08:19 a respectable IPO bump,
0:08:24 and a check for $411 million, aka a year of burn.
0:08:26 The valuation was down
0:08:30 from Tempus’s private market valuation of $8 billion,
0:08:34 but an 11x revenue multiple is still greater
0:08:36 than that afforded its competitors,
0:08:39 such as GardenT and NeoGenomics,
0:08:44 which trade at 6x and 2.7x respectively.
0:08:47 GardenT welcomed Tempus to the public markets
0:08:51 with a patent lawsuit three days before the IPO.
0:08:53 See above, dick move.
0:08:57 How did a money-losing business
0:09:00 facing a patent lawsuit in a competitive market
0:09:04 run by a guy whose previous company Groupon
0:09:07 trades at 6% of its IPO valuation
0:09:12 after burning through $1.5 billion of investor capital,
0:09:15 garner a multiple nearly double
0:09:18 that of its most richly valued competitor?
0:09:23 A, never underestimate the market’s ability
0:09:25 to provide a product or story
0:09:29 when people have cash in hand.
0:09:32 In this instance, it will likely again
0:09:35 be investors who get beamed in the face.
0:09:42 Tempus refers to AI 228 times in its IPO paperwork,
0:09:45 even tacking those letters
0:09:48 onto the end of its name last year.
0:09:52 Notably, the company first filed for an IPO in 2021,
0:09:57 and back then, it mentioned AI 78 times.
0:10:02 The AI hype refers to the third leg of Tempus’s stool,
0:10:06 its AI applications product line.
0:10:10 The idea is that Tempus will combine its lab testing
0:10:14 with a comprehensive review of a patient’s entire record,
0:10:17 other test results, physician’s notes,
0:10:20 family history, medications, et cetera,
0:10:23 and provide recommendations for patient care.
0:10:26 An AI doctor, which sounds amazing,
0:10:29 but it’s also sci-fi, i.e. fantasy,
0:10:33 which it is because the AI applications segment
0:10:37 currently provides 2% of the company’s revenue.
0:10:41 Tempus hasn’t had time to add AI to its logo,
0:10:43 and the only part of its website
0:10:45 that incorporates the new name
0:10:47 is the investor relations section.
0:10:51 The S1 reads like a venture capital pitch deck
0:10:55 written by an LLM with the following prompt.
0:10:57 Pull together a 30-minute slide presentation
0:11:02 for an IPO road show that positions us as an AI firm.
0:11:07 Second prompt, more cowbell if cowbell is AI.
0:11:13 I can’t decide if I should criticize Tempus or commend it.
0:11:16 The market wants AI companies,
0:11:18 Tempus wants the market’s capital,
0:11:21 and it pairs the trade via AI washing.
0:11:24 Everybody’s doing it,
0:11:27 and the company’s ability to attract cheap capital
0:11:29 may provide the steroids to turn it
0:11:31 from Carl Lewis to Ben Johnson.
0:11:36 Tempus AI isn’t the first company to play the name game.
0:11:40 C3.AI started life as regular C3,
0:11:43 had a cup of coffee as C3 Energy,
0:11:48 and jumped on the Internet of Things bandwagon as C3 IoT,
0:11:51 before going public as C3.AI.
0:11:57 In the UK, the largest domestic energy company, Octopus,
0:12:02 has jacked its valuation nearly 2X since 2001,
0:12:06 and its CEO can’t stop talking about AI.
0:12:11 Starbucks is using AI to nurture the human spirit.
0:12:16 Kellogg awards an MBAI business school degree.
0:12:22 At my online ed startup section, we offer an AI Academy,
0:12:25 but we haven’t changed the name to section.AI,
0:12:29 although GoDaddy is selling the URL for just $798,888,
0:12:36 a small price for a 2X valuation bump.
0:12:41 Even actual washing machines are in on the game.
0:12:46 LG introduced an AI-powered washing machine in 2020.
0:12:50 Goldman Bankers bring a washing machine to every road show.
0:12:54 We’ve been here before, and the cycle always turns.
0:12:56 Most recently, it was crypto,
0:12:59 and the NFT-ification of everything.
0:13:02 The dot-com boom in the late ’90s
0:13:05 saw the launch of businesses, including DrCoup.com,
0:13:09 the website of former Surgeon General C. Everett Coop,
0:13:13 which popped 38% on its NASDAQ IPO
0:13:16 before going under in 2001.
0:13:20 There are some signs the golden age of AI washing
0:13:24 is slowing from the spin cycle, coming to an end.
0:13:27 Regulators are paying attention.
0:13:31 The SEC hit two investment advisors
0:13:34 with six-figure fines for falsely claiming
0:13:38 to use AI in their financial forecasts,
0:13:41 and the agency’s enforcement head made it clear
0:13:45 this was a warning shot for publicly traded companies.
0:13:50 Quote, “Public issuers making claims about their AI adoption
0:13:54 must also remain vigilant about similar misstatements
0:13:59 that may be material to individuals’ investing decisions.”
0:13:59 Unquote.
0:14:04 The SEC also brought fraud charges
0:14:07 against defunct recruiter Junco,
0:14:11 which claimed to use AI to identify diverse applicants,
0:14:14 but flamed out last year when its founder was revealed
0:14:19 to have inflated its numbers and concocted fake testimonials.
0:14:21 The FTC wants companies to know
0:14:24 that it’s watching their AI claims,
0:14:27 and the FDA is looking into regulating the use
0:14:30 of AI models in healthcare.
0:14:33 The market’s favorite citizen sheriff,
0:14:35 Hindenburg Research, recently pointed
0:14:38 at short-selling guns at Equinix,
0:14:40 accusing the data center provider
0:14:43 of selling an AI pipe dream.
0:14:48 Tempus AI’s IPO may be the latest signal
0:14:51 that the AI washing cycle is ending,
0:14:56 as its modest pre-orchestrated pop has evaporated.
0:15:00 And C3.AI’s stock is already off 80%
0:15:03 from its post-IPO high in 2021.
0:15:07 The line between AI opportunity and AI washing
0:15:11 is neither clear nor fixed.
0:15:14 Sure, it’s obvious for the outliers.
0:15:18 NVIDIA will continue to register upside-powering AI,
0:15:24 and shady brokers who claim to use AI to pick stocks will not.
0:15:25 But for most firms,
0:15:29 clarity will only come with hindsight.
0:15:33 Ironically, a year ago, the big story was how to detect
0:15:36 if someone was using AI,
0:15:39 news stories, student papers, lawyers.
0:15:43 Today, we’re attempting to discern
0:15:47 if a firm is not using AI.
0:15:52 Life is so rich.
0:15:56 (upbeat music)
0:15:58 (upbeat music)
0:16:01 (gentle music)
0:16:03 (gentle music)

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0:01:25 Episode 305.
0:01:27 305 is Erica, belonging into parts of Florida.
0:01:29 True story, a man after killing his partner
0:01:33 and then eating his partner took his dog for a walk.
0:01:37 How come you just knew that guy lived in Florida?
0:01:41 Not a joke.
0:01:42 Not a joke.
0:01:43 Go, go, go!
0:01:54 – Welcome to the 305th episode of the Prop G-Pod.
0:01:57 I am still in the South of France, the Cannes Line Festival.
0:02:01 My Pivot co-host, Kara Swish, and I recorded live
0:02:03 on stage at the AddWeek house.
0:02:05 You can hear that episode over the Pivot feed tomorrow.
0:02:08 It was lovely.
0:02:09 It was lovely.
0:02:09 We had Rosé after.
0:02:10 It was very nice.
0:02:11 Also, the Olympic torch came marching through.
0:02:15 Does anyone care?
0:02:17 Does anyone care about the Olympics anymore?
0:02:19 I got invited to the Olympics and I said to my kids,
0:02:21 “Hey, do you want to go to the Olympics?”
0:02:22 And they’re like,
0:02:23 “What are the Olympics?”
0:02:23 Literally they’re like, “Do we have football tickets?”
0:02:26 Which, you know, soccer.
0:02:27 And I’m like, “No.”
0:02:28 And they’re like, “No, we’re not interested.”
0:02:29 We don’t want to hear.
0:02:31 We don’t want to see 100 hours of diving, swimming,
0:02:33 and discus throwing.
0:02:34 They just, it’s such an interesting case study
0:02:37 and I don’t know the answer
0:02:38 in why the Olympics have fallen so far
0:02:41 and the World Cup has ascended
0:02:43 at such an incredible pace.
0:02:45 Anyways, I’m making the rounds again.
0:02:47 I like it here because people come up to me and say hi
0:02:49 and I purposely take my boys into town
0:02:51 because I’m desperate for their affirmation.
0:02:52 I want them to see that what I do
0:02:54 actually gets some recognition.
0:02:57 So what are we doing?
0:02:58 We’re skipping our news headlines
0:03:00 and busting right into our conversation
0:03:01 with Ruchir Sharma,
0:03:03 the chairman of Rockefeller International and founder
0:03:05 and chief investment officer of breakout capital
0:03:08 and investment firm focused on emerging markets.
0:03:10 We hear all about Ruchir’s new book,
0:03:11 “What Went Wrong with Capitalism.”
0:03:14 Okay, Ruchir, where does this podcast find you?
0:03:16 – I’m here in New York in midtown.
0:03:18 – Oh, nice.
0:03:19 Well, let’s bust right into it.
0:03:20 In your new book, “What Went Wrong with Capitalism,”
0:03:23 it’s really a critique of capitalism,
0:03:26 a capitalist critique of capitalism, as you say.
0:03:28 So tell us, how has the system been ruined?
0:03:31 – Yeah, I think actually showing the book here, Scott,
0:03:34 which is the fact that if you look at what’s been happening
0:03:38 in America, pretty much a lot of the Western world
0:03:40 over the last few decades,
0:03:42 is that we have progressively seen
0:03:45 greater and greater government intervention in the economy.
0:03:49 The suite of habits extends to just more
0:03:52 than government spending.
0:03:53 Government spending of the share of the economy
0:03:55 has gone up from a century ago at just 3%
0:03:58 when the government would do little more
0:03:59 than deliver your mail to about 36% today.
0:04:03 But it’s not just that.
0:04:05 It is if you look at the regulatory state,
0:04:08 we look at the impulse to bail out,
0:04:10 the proclivity to manage the business cycle.
0:04:14 Just across the board,
0:04:16 we have seen a massive increase
0:04:18 in government intervention in the economy
0:04:20 with the consequence that it’s destroyed,
0:04:23 the creative, destructive fiber of the economy,
0:04:27 and productivity growth has been declining
0:04:30 for the last few decades as well.
0:04:32 So that’s the point I try and make,
0:04:34 which is that there are lots of perverse consequences
0:04:37 that have come out of this systematic intervention
0:04:41 in the economy,
0:04:42 and those consequences include declining productivity,
0:04:47 rising inequality,
0:04:48 and also this feeling amongst most Americans
0:04:53 that the system they have in place is not working.
0:04:55 Nearly 70% of Americans want big economic change
0:04:59 or want the current economic system to be torn down.
0:05:02 – So let’s break that down.
0:05:04 So it’s impossible to deny that government spending
0:05:08 is not out of control, right?
0:05:11 Seven trillion dollars on five trillion receipts.
0:05:13 There’s been unbelievable or staggering bailouts,
0:05:17 I think, what, six, eight trillion dollar COVID relief.
0:05:20 The only thing I would push back on and require,
0:05:22 or would double click on,
0:05:25 is this notion that we’re over-regulated.
0:05:27 My sense is that some of the biggest industries
0:05:29 are under-regulated and we’ve had monopolies form.
0:05:32 Your thoughts?
0:05:33 – Yeah, so, again, yeah, let’s look at the data, right?
0:05:36 Which is the fact that America is introducing
0:05:38 3,000 new regulations a year.
0:05:41 And that’s gone up over time.
0:05:44 And I argue in the book that, in fact, regulation
0:05:47 tends to be pro-incumbent and pro-big business
0:05:51 because when you introduce new regulations,
0:05:54 the existing people are able to game the system much better,
0:05:58 get the regulations they want,
0:06:00 and also it makes it that much more expensive
0:06:04 for new companies to come up.
0:06:06 So therefore, it’s one of the reasons I think
0:06:08 that the number of startups in America
0:06:10 has been declining right up until the pandemic.
0:06:13 We saw a big decrease in the number of startups in America
0:06:17 over the preceding two or three decades.
0:06:18 So I would say that, yes,
0:06:20 that we possibly can do with better antitrust regulation,
0:06:24 which is what I think that you’re alluding to.
0:06:26 But I think that we sort of have to see
0:06:29 that in every industry otherwise,
0:06:31 we have seen regulations increase
0:06:33 and that tends to hurt small and medium-sized businesses
0:06:36 from coming up.
0:06:37 I know it from personal experience
0:06:39 that the cost of, let’s say, setting up a new fund
0:06:43 is up 10 times over the last 20 years.
0:06:46 So that makes it very difficult
0:06:47 for someone looking to set up a new fund
0:06:49 and breaking even compared to some large fund
0:06:52 which is already there, has the resources,
0:06:55 has the legal compliance departments to deal with all this.
0:06:59 – So it makes sense that certain industries,
0:07:02 such as financial services where more compliance,
0:07:06 you know, Sarbanes-Oxley, whatever you want to,
0:07:09 it just gets harder and harder and harder to compete
0:07:12 or to start up.
0:07:13 My understanding is there were more new business applications
0:07:16 or permits filed last year than in history.
0:07:19 And two, it does seem though that some of our biggest industries
0:07:24 have figured out a way to weaponize government
0:07:26 or weaponize lobbyists.
0:07:29 But what you’re saying is the majority of industries
0:07:31 are over-regulated and this suppresses economic growth.
0:07:35 Do I get that right?
0:07:36 – Absolutely.
0:07:37 So I’d say, you know, and you’re correct,
0:07:39 that we did see like a spike up in new businesses
0:07:42 or so over the last couple of years,
0:07:44 but a lot of that was because during the pandemic,
0:07:47 many had to shut down.
0:07:48 So that’s a bit of a churn which is going on.
0:07:50 That’s not been the true trend over the last 30 to 40 years.
0:07:55 So I think we have to keep that in perspective.
0:07:57 And the second point, as you say, is that, yes,
0:08:00 you know, there has been some deregulation.
0:08:02 For example, there’s been financial sector deregulation,
0:08:04 which is why financial markets have exploded a lot.
0:08:07 But I’d say for most industries in things like hospitality
0:08:11 and things like restaurants and stuff,
0:08:13 the number of regulations that any small business
0:08:15 has to deal with has gone up a lot.
0:08:17 And that shows up in all sorts of ways.
0:08:19 For example, if you look at the number of lawyers in America,
0:08:22 America has always had a very large legal population.
0:08:26 The number of lawyers per capita
0:08:28 is about the largest in the world.
0:08:30 But again, that this growth has exploded
0:08:34 in the last 20 years or so.
0:08:36 So it’s clearly in terms of who’s benefiting
0:08:39 and even in terms of lobbyists that you point out,
0:08:41 which is that the number of lobbyists in Washington
0:08:44 have been captured by all the Big Tech firms.
0:08:47 The Big Tech firms dominate the number of new lobbyists
0:08:51 in Washington or just total spend on lobby.
0:08:54 – So in your book you say in the 2010s,
0:08:57 economies worldwide began to slow.
0:09:00 Why did this happen and where are we today?
0:09:02 – Yeah, so productivity growth across the world
0:09:04 has been slowing.
0:09:05 And so I think that this is what in fact
0:09:07 looks America a bit better,
0:09:08 which is that the productivity growth in places like Europe
0:09:12 has been slowing even more than what’s happened in America.
0:09:15 But the point I make in the book is that’s partly
0:09:17 because they’re the kind of state intervention
0:09:21 they have, the regulatory phalanx that they have
0:09:24 is much greater than even here in America.
0:09:27 So that’s not the right benchmark.
0:09:28 But in general, I make the point that productivity growth
0:09:31 has been slowing everywhere in the mix of what is otherwise
0:09:35 such a powerful tech boom.
0:09:36 And this is a trend that predates even the 2010s.
0:09:39 It’s been like on a decline apart from a, you know,
0:09:41 like a brief surge in the late 1990s and early 2000s
0:09:45 when you had the internet revolution.
0:09:47 Productivity growth has been generally slowing everywhere.
0:09:51 And I deal with this productivity paradox
0:09:53 in the book extensively saying that
0:09:55 what could be causing this?
0:09:57 You know, all these arguments that
0:09:59 it’s because of mismanagement and all,
0:10:01 but that’s not true because, you know,
0:10:03 like in the late 90s on the back of the internet,
0:10:05 boom, you did see a temp research.
0:10:07 So I think that the reason economic growth
0:10:09 has been slowing a lot
0:10:10 has to partly do with demographics,
0:10:12 that he has population growth across the world
0:10:14 has slowed down.
0:10:15 That does not much we can do about that.
0:10:18 But as far as productivity growth is concerned,
0:10:20 that too has slowed down significantly
0:10:23 despite some tech innovations that have taken place.
0:10:26 And now we are hanging our hat on AI boosting productivity.
0:10:29 But I think that the, as I said,
0:10:32 that the capitalist creative destructive fiber
0:10:34 of the economy has been undermined
0:10:37 because we’re keeping alive so much dead wood.
0:10:39 I mean, today, the number of zombie companies, as I say,
0:10:43 that we have in the economy today
0:10:45 by some measures is close to 20%.
0:10:48 What do I mean by that?
0:10:49 These are companies that are defined as firms
0:10:52 that have not or are not earning enough profits
0:10:56 to even cover their interest payments
0:10:58 for three years in a row,
0:10:59 but keep going back to the market to refinance themselves.
0:11:03 And when we do that,
0:11:04 we sort of obviously undermine productivity growth
0:11:07 in the economy.
0:11:08 – Yeah, I’m a big believer that you need churn
0:11:11 for a robust economy
0:11:13 and that the incumbents don’t want churn.
0:11:15 Just let me put forward a thesis
0:11:18 and I’d like to get your response,
0:11:19 that one reason why we’ve seen a decline in productivity
0:11:23 is because of low corporate tax rates.
0:11:25 And that is corporations have a memory
0:11:29 and when they can get 80 cents on the dollar
0:11:32 out to a shareholder,
0:11:33 they will choose to distribute earnings.
0:11:36 Whereas if the tax rate is say 40%
0:11:38 and they’re only gonna get 60 cents out
0:11:41 and they get sort of a 40% reduction in the price
0:11:45 of reinvesting in the company
0:11:46 and plan property and equipment to grow the top line,
0:11:49 that the incentive is to or the hurdle rate
0:11:52 for a go on investment is lower
0:11:55 when tax rates are higher.
0:11:56 Is there any truth to that?
0:11:58 – Well, the evidence again doesn’t really back it up, right?
0:12:00 Because if you look at what’s happened in Europe,
0:12:03 or wherever the corporate tax rates have been higher,
0:12:06 they haven’t been able
0:12:07 to sort of get higher productivity growth either.
0:12:10 So I just don’t see the evidence of that.
0:12:12 Yes, I do feel the fact that the tax system
0:12:15 could do with a big overall.
0:12:16 I think we all agree with it.
0:12:18 There’s too much of a disparity
0:12:19 in the way that a W2 wage earner is taxed
0:12:23 compared to how much lower capital gains taxes are.
0:12:27 So yeah, there are other distortions
0:12:29 which I completely agree with.
0:12:31 But I think that in the book,
0:12:32 what I’m gonna focus on is the fact that
0:12:34 what happened to capitalism?
0:12:36 What did the founders have in mind?
0:12:38 Is the system today what we have capitalism
0:12:41 and why are so many young people in places
0:12:44 like America disillusioned with the world capitalism?
0:12:47 As I say in the book that the surveys show
0:12:49 that most young Americans, particularly Democrats,
0:12:53 say they would rather have socialism than capitalism.
0:12:56 That’s a really big statement for a country
0:12:59 that was the founder of pro and practical purpose
0:13:02 as a capitalist system.
0:13:03 We’ll be right back.
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0:16:14 – So let’s assume that we agree,
0:16:24 that most people agree that we need
0:16:26 to cut government spending.
0:16:27 Where do you think we cut it?
0:16:29 – So that’s the point, right?
0:16:30 Which is that, how do you prioritize that?
0:16:32 I mean, what has the Biden administration done?
0:16:34 It has just doubled down on its spending.
0:16:36 So now it’s spending on everything.
0:16:37 It’s spending on industrial policy.
0:16:38 It’s spending on the Chips Act.
0:16:40 And I think on an individual basis,
0:16:43 when you look at government spending,
0:16:44 we all think that yes, in terms of each one is justified.
0:16:48 But I think that we need to prioritize
0:16:52 that don’t we need entitlement reform?
0:16:55 Should we really be spending on industrial policy?
0:16:57 Because our priorities are different.
0:16:59 If you want a welfare state,
0:17:01 if you want to give people lots of,
0:17:03 like in terms of even cash benefits,
0:17:06 as some people want to do,
0:17:09 I think it’s about prioritizing
0:17:10 that what can we do realistically?
0:17:12 And this thinking that debt and deficits don’t matter
0:17:15 because so many people for so long
0:17:17 have been crying wolf about this, right?
0:17:19 Which is that in New York,
0:17:21 we have had these debt clocks,
0:17:23 which have been up for decades.
0:17:26 And it’s because nothing has happened.
0:17:28 We think that what’s the problem?
0:17:30 We can go on spending this way and we can,
0:17:33 and there is no real consequence to that.
0:17:36 And what I try and sort of show here
0:17:38 is that yes, there is a consequence.
0:17:40 One, that because of this,
0:17:42 we have already seen a decline in terms of productivity
0:17:45 because of the suite of government habits.
0:17:47 And two, that now we are taking this
0:17:49 just to a ridiculous extent
0:17:51 that America used to run a budget deficit
0:17:54 of around 3% of GDP for the last couple of decades.
0:17:57 It was in line with other developed countries.
0:18:01 Today, we’re running that at 6% of GDP,
0:18:04 way higher than any developed country in the world.
0:18:07 And our public debt as a share of the overall economy
0:18:11 has crossed 100% and is only behind that of Japan and Italy.
0:18:16 And at this pace, we’ll be higher than Italy
0:18:18 by the end of the decade.
0:18:20 So I think that the problem is this,
0:18:22 which is that the argument that debt and deficits
0:18:26 will cause a crisis seems very stale now
0:18:29 because nothing has happened
0:18:31 despite these crisis warnings for so long.
0:18:33 And there is this real confidence
0:18:36 which almost borders on arrogance
0:18:39 that because we are America,
0:18:41 the world will keep funding it.
0:18:43 We have the world’s main currency which people use.
0:18:46 So they keep buying dollars and we’ll never have a problem.
0:18:49 It’s that kind of complacency and arrogance
0:18:52 about where else will the money go?
0:18:54 It has to come here, which sort of bothers me.
0:18:57 And we were not that way.
0:18:59 And in fact, I have still like a lot of great things
0:19:02 about America, but I think that what’s happened now
0:19:05 is that we’ve just taken this to another extreme.
0:19:08 – So the Biden administration calls you
0:19:11 and says, okay, give us two or three things,
0:19:14 magic one, you would want to see implemented right away
0:19:17 in terms of policy or laws or tax policy,
0:19:19 what would those two or three things be?
0:19:21 – Yeah, I’d say that in terms of,
0:19:23 if I know that nobody listens until they have a crisis.
0:19:27 So I doubt I’m gonna get that call,
0:19:29 but still I think that, you know, let’s think about it.
0:19:31 I’d say that in terms of one thing, you know, like stuff
0:19:34 is that think about every time you do a new regulation,
0:19:37 who’s it hurting and who’s it benefiting?
0:19:40 I mean, I’d put a freeze on that.
0:19:42 I mean, Trump tried something like that,
0:19:43 but it was a failure by the end
0:19:45 because you know, you couldn’t focus on anything.
0:19:48 So talked about not putting new regulation,
0:19:51 but by the end of the administration,
0:19:53 there were tons of new regulation which were going on.
0:19:55 So I’d say that in terms of focusing,
0:19:57 in terms of, okay, some tougher anti-trust regulation,
0:20:02 yes, I’m in favor of that,
0:20:04 but the vast swath of regulations that are put in there
0:20:07 really hurt small and mid-sized businesses.
0:20:09 So think about, you know, putting in like new regulation.
0:20:13 Two, you have to think about the debt and deficits,
0:20:15 which is that don’t have this callous attitude
0:20:18 that nothing has happened, there’s been no crisis.
0:20:21 So we can keep running deficits.
0:20:22 We are at full employment in the economy
0:20:25 and we have a 6% budget deficit already.
0:20:27 Imagine if you have a downturn, it’ll be nine or 10%.
0:20:30 So I would say that in terms of, you know,
0:20:32 these open-ended chips acts, industrial policy,
0:20:36 we need to put a check on that.
0:20:37 And I think that the other thing that I would say also
0:20:39 is the fact that to make a very clear statement
0:20:42 that we’re not gonna bail out companies
0:20:44 at the slightest hint of trouble.
0:20:46 I mean, you know, that statement needs to go out
0:20:48 because today you speak to people in private,
0:20:50 in the private equity world or other places.
0:20:53 There is a simple assumption that, you know, what the hell?
0:20:56 We’ll give it a punt and if it doesn’t work,
0:20:58 yeah, I mean, you know, the government’s there
0:21:00 to back us out.
0:21:01 So that sort of thinking has to go away.
0:21:04 So these are just broad points, I would say,
0:21:07 at this stage that we need to think about.
0:21:09 – And moral hazard.
0:21:12 So, Rishir, you have done a great deal of work on India.
0:21:17 Can you give us, I would love for you
0:21:19 just to sort of use the cliff notes on the Indian economy
0:21:21 and what you think the prospects are
0:21:24 for the Indian economy over the next several years?
0:21:26 – Yeah, so in fact, I begin this book,
0:21:28 like in the prologue by speaking about my journey
0:21:30 from India because as you said, I was born there and I,
0:21:34 and India was a truly socialist economy
0:21:36 when I was born then in the mid 1970s.
0:21:40 And so I saw what socialism could do,
0:21:43 but fortunately for India,
0:21:44 after especially it faced an economic crisis in 1991,
0:21:48 it’s progressively been getting freer,
0:21:51 progressively been moving up the indices
0:21:53 of economic freedom.
0:21:54 And so therefore, I’ve been much more optimistic
0:21:58 about the economy as that’s happened.
0:22:01 But my favorite line about India
0:22:02 that I came up with a few years ago
0:22:04 is that this is a country that consistently disappoints
0:22:07 the optimists in the pessimists.
0:22:08 So there’s a lot of optimism I have,
0:22:11 but I would keep it in check to know
0:22:13 that this is a pretty complex country.
0:22:15 It’s not a homogeneous country like China
0:22:18 which moves in one direction.
0:22:19 It’s very heterogeneous, very diverse.
0:22:22 So you got different things and different places
0:22:25 which play itself out.
0:22:26 But generally, I remain optimistic.
0:22:28 I see that the trajectory is positive.
0:22:31 And of course, we can’t not have this conversation
0:22:33 and speak about the landmark election result.
0:22:36 And that’s a very hopeful sign,
0:22:38 which is the fact that it’s a country
0:22:40 which believes in its democratic tradition.
0:22:44 And I think that that’s something
0:22:45 which also helps in the long term
0:22:47 because this is a lot of research that I’ve done
0:22:49 that under Modi, there was a real fear
0:22:51 that India was moving towards an authoritarian direction.
0:22:55 Now you’ll argue maybe that’s good for its economy
0:22:58 because you’re moving in an authoritarian direction
0:23:00 and you can take tougher decisions.
0:23:02 But the research I’ve done on this
0:23:03 is the fact that under authoritarian regimes,
0:23:06 you end up either getting very good economic outcomes
0:23:09 for a while or you end up getting disastrous economic outcomes
0:23:13 because there’s no one to tell you when you go wrong.
0:23:16 And I think that there was a risk
0:23:18 that India was moving in that direction.
0:23:20 There’s more checks and balances here.
0:23:22 And typically over time,
0:23:24 democracies tend to compound much better
0:23:26 in terms of growth rates than authoritarian regimes do.
0:23:29 So I feel relatively optimistic about India.
0:23:32 Yes, there’ll be some sort of bitter fights politically
0:23:37 after the election result last week
0:23:38 where the opposition feels emboldened.
0:23:40 But I think that it’s moving in the right direction.
0:23:43 The only thing I’ll keep in check is expectation
0:23:45 that this is no next China
0:23:47 which is going to grow at 9 or 10%.
0:23:49 It’s going to be more like a 6, 7% type growth rate at best
0:23:53 that we’ll see in India for the foreseeable future.
0:23:56 – So now do you care?
0:23:57 I live in London and I would just be curious.
0:24:00 You obviously spent a lot of time thinking about,
0:24:03 you know, how your title,
0:24:05 “10 Rules for Successful Nations and Breakout Nations
0:24:07 in Pursuit of the Next Economic Miracle.”
0:24:09 Let’s assume this is not going to be an economic miracle.
0:24:12 I think that ship is sailed.
0:24:13 But what rules are they following or breaking
0:24:17 or not adhering to when we talk about successful nations?
0:24:22 – Well, unfortunately, I think that U.K. doesn’t rank well,
0:24:24 you know, because as you rightly said,
0:24:26 that I maintain this ranking of all these countries
0:24:30 and where they rank on these various metrics.
0:24:33 And in the Anglo-Saxon world, of course,
0:24:35 the country that has been doing the worst,
0:24:38 which I think a bit of a surprise
0:24:40 and I wrote about that is Canada.
0:24:42 That’s been the worst really over the last 10, 15 years.
0:24:45 And then next comes U.K., then Australia.
0:24:47 And the U.S. compared to these countries
0:24:49 has been doing relatively better.
0:24:51 And that’s the irony of it.
0:24:53 You know, in terms of all the problems
0:24:54 we’ve spoken about in America.
0:24:56 But in terms of all the problems we spoke about in America,
0:24:59 in terms of are much more severe in places like U.K.
0:25:02 that in terms of, you know,
0:25:04 what it’s been doing with its deficits,
0:25:07 although America now has overtaken it,
0:25:09 in terms of, you know, what it’s been doing
0:25:12 in the number of zombie companies.
0:25:14 So I’d say that in that regard,
0:25:16 U.K. in fact ranks even worse than America on most metrics.
0:25:20 – So isn’t, it’s really fascinating.
0:25:23 Australia, Canada, and the U.K. not doing well.
0:25:27 So take them at in the U.S.
0:25:30 Are we all guilty of overspending capitalism on the way up,
0:25:37 socialism on the way down, cronyism, bloated government,
0:25:41 bailouts.
0:25:42 But the difference is the U.S. has AI in a tech sector
0:25:46 that just creates so much economic value
0:25:49 and draws capital from the rest of the world
0:25:51 that at least props up or wallpapers over
0:25:54 are problems more so than those other three nations.
0:25:57 What do you think? – Absolutely correct.
0:25:58 Yeah, so that’s the, that’s my summary that, you know,
0:26:01 which is the fact that, you know, like,
0:26:04 it just pains me that in terms of the fact that
0:26:06 I don’t even compare America to these other countries
0:26:08 because America is still the beacon for the world, right?
0:26:12 It’s still the largest economy that everyone looks up to,
0:26:15 to see as to what is American doing.
0:26:16 And the American brand of capitalism, unfortunately,
0:26:20 has been dented, but you’re right,
0:26:21 that these Anglo-Saxons and other economies
0:26:23 that you pointed out are arguably in worse shape
0:26:27 in doing things even worse than America is.
0:26:31 And America, as you point out,
0:26:33 has the success of the tech engine there.
0:26:36 But again, it’s slightly concerning to me
0:26:38 that the, like in America,
0:26:40 the domination is getting so concentrated
0:26:43 that the value is being created,
0:26:45 but it’s being created in just very few select companies,
0:26:49 you know, and I think that that is a real problem
0:26:51 and communities are so big. – And communities, yes.
0:26:54 – Yeah, it is really striking.
0:26:57 What do you think about the notion of,
0:27:00 so the one thing we didn’t talk about
0:27:02 that I think plays a big role in all of this
0:27:04 is immigration policy.
0:27:05 Comparant contrast, different immigration policies
0:27:09 across the nations you look at,
0:27:10 and what do you think is sort of,
0:27:12 if you will, the ideal,
0:27:13 if there is an ideal immigration policy,
0:27:15 and what does it indicate in terms
0:27:16 of America’s immigration policy?
0:27:18 – Yeah, I think that as far as America is concerned,
0:27:22 even though it’s been a big problem in America
0:27:24 and it’s a big political issue,
0:27:26 America’s at least been better at assimilating immigrants
0:27:30 than a lot of European countries in that regard.
0:27:34 And I think that countries like Australia and all
0:27:38 have been pretty good in terms of as well.
0:27:41 So I’d say that generally here,
0:27:42 the Anglo-Saxon world has been better than Europe
0:27:45 in terms of assimilation of immigrants.
0:27:49 But again, as I said, that what is good economics
0:27:51 is not always what’s good politics,
0:27:54 which is that even last year,
0:27:57 like I pointed out that immigration is what really helped
0:28:00 countries like America avoid a recession
0:28:04 and bring inflation down much more than
0:28:07 in other countries did last year.
0:28:11 But the problem is the fact that it’s become
0:28:13 such a political issue about tearing apart
0:28:15 the social fabric and stuff,
0:28:17 that what is good economics in obvious terms
0:28:20 is not good politics, and I don’t see that changing.
0:28:23 So I’d say that, yes, I think that immigration
0:28:26 is out of control for many people out here in America,
0:28:29 and so we’re gonna get a clamp down on that,
0:28:31 regardless, I think, of what happens in November.
0:28:35 But in general, I would say America
0:28:37 and the Anglo-Saxon countries like Australia
0:28:39 have done a better job at assimilating immigrants
0:28:42 compared to European countries like France.
0:28:45 – Well, let me say something that’s,
0:28:47 I don’t know, is wrought with emotion.
0:28:53 Is it that we’ve done a better job of assimilating,
0:28:55 or we attract a different type of immigrant?
0:28:58 – Well, it could be both.
0:28:59 I think a combination of both, right,
0:29:01 which is that in terms of what’s happening,
0:29:03 but I just look at it more from a simulation,
0:29:06 but then you start getting into cultural issues
0:29:07 in terms of who’s coming and what’s happening,
0:29:10 and that just gets a very slippery slope
0:29:12 in terms of looking at immigration in that regard.
0:29:14 – So, looking at all the economies in the world,
0:29:19 what two or three economies are you most bullish on
0:29:22 in terms of you mentioned that Canada
0:29:24 is doing really poorly, the UK is doing really poorly.
0:29:27 America, you would argue, is kind of like,
0:29:28 it sounds like average is slightly above average.
0:29:31 Any other role models for, you know,
0:29:33 I think of certain countries in Southeast Asia,
0:29:35 I think of Singapore, where we can look at
0:29:38 the way they’ve managed their economy
0:29:40 and think this is the role model?
0:29:42 – Well, I see, yeah.
0:29:43 I think it depends on the time frame,
0:29:45 but I think that the economies that have been sort of good.
0:29:49 Again, which is the economy
0:29:50 that’s doing the best in Europe these days?
0:29:53 It’s Greece, right?
0:29:54 Which is that this is a country
0:29:55 which till 10 years ago was like an example of a complete,
0:29:59 yeah, if I can say so, a basket case in terms of that.
0:30:03 But just look at how well Greece has come back.
0:30:06 It’s booming now.
0:30:07 It was, again, forced.
0:30:08 This is what crisis does.
0:30:10 It is one silver lining of a crisis.
0:30:12 It’s the only time when governments reform
0:30:15 or change things is when you have a crisis.
0:30:17 So, Greece runs out of money, it’s on the verge of default,
0:30:21 and then you end up getting a lot of reform.
0:30:23 So, Greece, I think, has been a comeback story.
0:30:26 In fact, in general, the club-made countries of late
0:30:29 have been doing better than their continental peers,
0:30:33 but Greece is an example of that.
0:30:35 Then secondly, I would point to is a country,
0:30:38 like in Eastern Europe in general,
0:30:39 I’d say Poland is a shining example of that,
0:30:42 which is that it’s a country
0:30:43 which I think is next classified
0:30:45 to becoming a developed country.
0:30:46 Remember that in the world today,
0:30:47 there are more than 200 nations.
0:30:49 Only 40 or so are classified as developed countries.
0:30:52 Everybody else is classified as emerging,
0:30:55 and many of them, from Brazil to Mexico,
0:30:58 have been emerging forever.
0:31:00 So, but I’d say that it’s been a while
0:31:02 since a major nation joined the ranks
0:31:05 of the developed countries.
0:31:06 I think the next one to do so could be Poland,
0:31:09 which is on the brink of getting up
0:31:11 per capita income of $20,000 or so,
0:31:14 which makes it like a developed country.
0:31:16 Again, a lot, it’s done right
0:31:18 from having a very competitive manufacturing sector,
0:31:21 not too many flashy billionaires.
0:31:23 And in general, I’d say that the election result
0:31:27 in Poland last year sort of also took away
0:31:30 some political risk
0:31:31 because it’s a much more cooperative government
0:31:33 that have in place vis-a-vis the EU
0:31:37 and the European Union helped to give it
0:31:39 some pretty strong institutions.
0:31:41 So I’d say that it like,
0:31:42 I feel relatively optimistic about these countries
0:31:45 outside of the core of Europe from Greece to Poland,
0:31:48 as like for different reasons,
0:31:51 one’s a comeback star
0:31:53 and the other one’s been a consistent star
0:31:55 in the post-communist world.
0:31:56 – And just before you go, we’d be remiss
0:32:00 if we didn’t ask you about China, your thoughts?
0:32:03 – Well, I’ve been banished on China for a while now
0:32:05 because in terms of what’s been happening
0:32:07 to it’s both the two pillars of growth really,
0:32:11 which is that it’s been relying a lot on,
0:32:14 like when China boomed, it had great demographics.
0:32:16 And of course, when the boom slowed down,
0:32:18 it could still rely on taking on more and more debt
0:32:21 to keep going.
0:32:22 Those engines are now down.
0:32:25 So I feel that China is in a secular decline.
0:32:28 On a fundamental basis,
0:32:29 I don’t see China growing at a rate of more than 2% or 3%
0:32:32 for the foreseeable future.
0:32:34 So I’d say that, yeah, for now it seems
0:32:37 that the risk of a blow-up in China has sort of been
0:32:42 papered over because they’ve again done what it takes
0:32:45 to keep the economy afloat.
0:32:46 But the problem in China is the fact
0:32:48 that they can’t get away from the basic notion
0:32:51 that there is no country in the world
0:32:53 which is able to grow rapidly
0:32:55 or even grow when it has a negative population growth rate.
0:32:59 That headwind is just very hard to overcome.
0:33:03 And then second obviously is the debt issue in China,
0:33:06 where China has took on so much debt over the last decade
0:33:09 because it ambitiously wanted to keep its growth rate up.
0:33:13 But now it’s being forced to pay back that debt
0:33:15 in a way with the property sector
0:33:18 and all which took a lot of that debt in the doghouse.
0:33:21 So I feel that, yeah,
0:33:23 the China may not have a blow-up or a crisis,
0:33:26 but it’s sort of going the way
0:33:28 where the growth rate keeps slipping and sliding
0:33:31 and 2% or 3% is the growth rate for China,
0:33:34 which is a far cry from where it was a decade ago.
0:33:37 Rashir Sharma is chairman of Rockefeller International
0:33:40 and founder and chief investment officer
0:33:43 of Breakout Capital,
0:33:44 an investment firm focused on emerging markets.
0:33:46 He moved to Rockefeller in 2022 after a 25-year career
0:33:51 at Morgan Stanley Investment Management
0:33:52 where he was head of emerging markets
0:33:54 and chief global strategist.
0:33:56 Rashir is also the author of five books
0:33:58 including The 10 Rules of Successful Nations
0:34:01 and Breakout Nations in pursuit
0:34:03 of the next economic miracles.
0:34:06 His latest book, What Went Wrong with Capitalism is out now.
0:34:09 He joins us from the greatest city in the world,
0:34:12 New York City, Rashir.
0:34:14 Thank you very much, really enjoyed this conversation.
0:34:16 – Thanks, Garth.
0:34:17 Thank you for having me.
0:34:18 – We’ll be right back.
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0:37:32 (upbeat music)
0:37:39 – The most famous study on happiness,
0:37:46 actually every study on happiness,
0:37:48 we never get data that says clean across.
0:37:50 Geographies, cultures, income levels, shows the same thing.
0:37:54 If on the y-axis you have happiness
0:37:57 and on the x-axis you have age, happiness is a smile.
0:38:01 Zero to 25, Star Wars prom making out.
0:38:04 25 to 45 are what I call the shit gets real years.
0:38:08 Life is hard, money troubles, relationships,
0:38:11 someone you love a great deal gets sick and die.
0:38:13 I mean, life just hits you in the fucking face.
0:38:15 It really does, you get beaned in the face.
0:38:17 And you think, wow, this is harder than I thought.
0:38:19 And what I can tell you is a lot of people out there
0:38:21 are feeling the same way.
0:38:23 And if you’re a good person and you work hard,
0:38:24 I’m not just saying everything will work out.
0:38:26 You need to make sure you’re not stuck, right?
0:38:28 You’re still working.
0:38:30 Every now you saying, what are the three, four things
0:38:31 I gotta get done tomorrow?
0:38:32 You’re getting up, you’re trying, you’re showing up.
0:38:35 You’re asking others for help, right?
0:38:37 You’re expressing your emotions.
0:38:39 And then when you’re in your 40s and 50s,
0:38:43 something wonderful happens.
0:38:44 And that is you start to take, I don’t know,
0:38:47 you start to find joy in the most mundane things,
0:38:50 nature, food, your friendships.
0:38:52 So what I would tell you is if you’re struggling
0:38:54 in your 30s and 40s, I’m not suggesting just lay back
0:38:57 and everything’s gonna work out, that’s bullshit.
0:39:00 But what I can tell you is for the majority of people,
0:39:03 it does get better.
0:39:05 And again, if you’re in your 30s and things are tough,
0:39:09 you’re kind of where you should be.
0:39:10 And what I would tell you is to keep on keeping on,
0:39:13 that life does get better, that happiness waits for you.
0:39:16 (upbeat music)
0:39:18 This episode was produced by Caroline Shager
0:39:20 and Jennifer Sanchez as our associate producer.
0:39:23 And Drew Burroughs is our technical director.
0:39:25 Thank you for listening to “The Prodigy Pod”
0:39:26 from the Vox Media Podcast Network.
0:39:28 We will catch you on Saturday
0:39:29 for “No Mercy, No Malice” as read by George Hahn.
0:39:32 And please follow our Prodigy Markets Pod
0:39:35 wherever you get your pods for new episodes
0:39:38 every Monday and Thursday.
0:39:39 Please, if you can right now and you enjoyed the show,
0:39:43 go to Prodigy Markets and subscribe.
0:39:46 – Support for this show comes from HubSpot.
0:39:49 More to do’s, less time,
0:39:51 and an infinite number of tools to keep track of.
0:39:53 Doing business has never felt harder,
0:39:56 but you don’t need a miracle to hit your goals.
0:39:58 You just need HubSpot
0:39:59 because they’re all in one customer platform
0:40:01 can make growing your business infinitely easier.
0:40:05 Imagine this, high quality leads, fast closing deals,
0:40:09 wildly happy customers, and more benchmark breaking quarters.
0:40:14 It’s not a miracle, it’s HubSpot.
0:40:16 visit hubspot.com to get started today.