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Author: The Prof G Pod with Scott Galloway

  • No Mercy / No Malice: Misdirects

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    Now our change honors LM Montgomery along with Anne of Green Gables,
    the ambitious and inquisitive orphan every generation has embraced as its own.
    These special edition $1 circulation coins celebrate a timeless storyteller and story,
    the power of imagination and the place that Montgomery’s PEI holds in our hearts.
    Find the LM Montgomery $1 coin today.
    The 100% Canadian beef McDonald’s Western barbecue quarter pounder is quite the mouthful,
    so who better to sell it in 30 seconds than a 100% Canadian auctioneer?
    So mercy, it’s back, 100% Canadian beef topped with delicious smoky barbecue sauce and bacon,
    who wants bacon? We got hickory smoked bacon strips, crispy onions, who wants pickles?
    Not one down, better than two sizes of processed cheddar cheese served on a toasted sesame seed
    bund and did so for a limited time at participating McDonald’s restaurants in western Canada.
    I’m Scott Galloway and this is No Mercy, No Malice. Narratives about the attempt on Trump’s life
    were shaped as the event was unfolding. Most of them are Mr. X, the real story,
    the crisis of young American men. Mr. X as read by George Hahn.
    Moments after he was shot by 20 year old Thomas Matthew Crooks and swarmed by secret service
    agents, Donald Trump had the instinct and physical courage to pump his fist for the crowd and shout
    fight. That image of him, defiant with blood running down his face, may help him recapture
    the White House and mark the year, possibly the decade. Soon after, anyone with an internet
    connection rushed to vomit out an explanation of events that rendered their perceived enemies as
    un-American, dangerous even. Republican congressman, Mike Collins of Georgia, announced on X, quote,
    Joe Biden sent the orders, unquote, equating Biden’s clumsy shooting metaphor, it’s time
    to put Trump in a bull’s eye, to instructions to carry out a hit. Elsewhere, conspiracy and
    misinformation from the left speculated the shooting had been a false flag staged by the
    Trump campaign itself. People on the far right declared that the secret services failure to
    prevent the shooting was caused by the DEI assignment of incompetent female agents. Spoiler
    alert, more white men protecting white men from other white men isn’t the solution.
    There’s also an understandable raft of questions wondering why, if attendees at the rally could
    see the shooter on the roof, the secret service did not. Thus far it appears this was a story of
    incompetence versus a conspiracy. Regardless of your politics, there are a few people who deserve
    to be relieved of their duties more than director Kimberly Cheadle. When President Biden addressed
    the nation on Sunday, he highlighted the need to cool down the temperature of American politics.
    Look, there’s no place in America for this kind of violence. It’s sick. It’s sick. It’s one of the
    reasons why we have to unite this country. We cannot allow for this to be happening. We cannot
    be like this. We cannot condone this. This is a reasonable request and also has zero chance of
    happening. All of these narratives are an effort to get you to look away. We knew who the perpetrator
    was before knowing who he was. A lonely young man with access to weapons of war trying to recapture
    social status with a perceived heroic act of violence. I’ve written and spoken a lot about
    the obstacles, financial, educational, social, sexual, spiritual, facing young men today so I
    won’t relitigate my case. If you’re interested, you can read more at the links in this post at
    profgalloway.com or find my TED Talk on YouTube. The Cliffs Notes. Over the past generation,
    there’s been a deliberate transfer of wealth from the young to the old. Among other things,
    the result is unaffordable and indefensible costs for education and housing. Things are especially
    bad for boys and young men. Algorithmically generated content on social media contributes and
    profits from young men’s increasing social isolation, boredom, and ignorance. With the deepest
    pocketed firms in history attempting to convince them they can have a reasonable facsimile of life
    on a screen, they grow up without acquiring the skills to build social capital or create wealth.
    They face an educational system biased against them and enter a workforce where the minimum
    wage is below the poverty line. Many boys grow up with nearly no male role models. The results
    include loneliness, depression, suicide, and an increased susceptibility to radicalization
    and belief in conspiracies. Alienation and disaffection drive depression and violence.
    By age 27, high school dropouts are four times more likely to be arrested,
    fired by their employer, on government aid, or addicted to drugs than their peers who graduated.
    One in seven men reports having no friends, and three of every four deaths of despair in America,
    suicides, and drug overdoses, are among men. We’re facing declining household formation,
    reduced birth rates, and slowing economic growth just as the baby boomers are entering decades of
    non-productive retirement. There is, to put it simply, a cohort of young people in our country
    who are denied the same opportunity presented to my generation—the chance to live a meaningful life.
    A generation of alienated young men can quickly thrust a nation into darkness.
    I spent last week in Germany for the European Championship. In between football matches,
    we did bike tours, learning about the history of Deutschland. For most of its centuries-long
    history, Germany has been a progressive society, tolerant of diverse religions,
    nationalities, and sexual orientations. Central to its 12-year descent into fascist totalitarianism
    was the same incendiary that inspired the Russian Revolution,
    the Arab Spring, and the fall of the Roman Empire—struggling young men.
    The Great Depression left many young men in Germany unemployed and without prospects.
    The National Socialist Party capitalized on this desperation by promising jobs,
    economic stability, and a return to national greatness. For young men from lower socioeconomic
    backgrounds, the Nazis offered unprecedented opportunities for social mobility. By joining
    the party or its affiliated organizations, men could gain power, status, and influence that were
    otherwise unattainable in the rigid class structure of Weimar Germany. These recruits
    made up the two million-strong Hitler youth, and then the Sturmabteilung, or SA, also known as the
    Brownshirts. Sometimes it takes just one disaffected young man to change the course of history.
    Gavrilo Princip was born on July 25, 1894, in the village of Obliay in Bosnia,
    at the time part of the Austro-Hungarian Empire. He was the second of nine children in a poor Serb
    peasant family. Only three of his siblings survived infancy. Think about that last sentence and the
    impact on your perspective had you been raised in an environment where only one-third of your
    brothers and sisters survived. Gavrilo moved to Belgrade in 1912, where he joined a Serbian
    nationalist organization, the Black Hand, a secret military society known for its use of
    terrorism to achieve political aims. Princip’s assassination of Archduke Franz Ferdinand and
    his wife set off the chain of events that led to World War I and set the stage for World War II.
    He was 19. There have actually been only 231 documented acts of political violence between
    2010 and 2020 in the U.S. However, with 40,000-plus gun deaths each year and 10 mass shootings a week,
    it’s naive to think large, frequent gatherings such as political rallies won’t eventually be
    subjected to random violence. What makes it more likely, the glycerin to the nitro of struggling
    young men, is access to weapons of war. The AR-15-style semi-automatic rifle Crooks apparently used
    is not a weapon for hunting, target shooting, or self-defense outside of a war zone.
    Cue the dull comments from gun violence apologists.
    The original AR-15 was designed in the 1950s because U.S. combat soldiers needed an accurate
    weapon that fired multiple rounds at the enemy fast. The AR-15’s descendants, once banned by
    President Clinton, are now the best-selling guns in America. When Trump was president,
    he considered reinstating the ban until the NRA talked him out of it.
    We knew who Thomas Crooks was before we ever heard his name. As my pivot podcast partner,
    Kara Swisher, put it, he was “that kid.” Somebody none of us had any trouble imagining.
    A kid with little social capital or connection to others. We know that kid. Some of us were that kid.
    A classmate told The New York Times about Crooks being mocked as a freshman for his
    dorky SpongeBob t-shirt and poor hygiene. She said, “Those other kids would always say,
    ‘Hey, look at the school shooter over there.’” The coarsening of our discourse, income inequality,
    and political polarization are problems that warrant our attention and resources.
    But the accelerant poured on almost every serious problem in our society is a generation of young
    men who lead increasingly bleak, lonely lives. We don’t have a monopoly on struggling young men,
    but we do have a monopoly on struggling young men who have access to weapons of war.
    We need more empathy, as well as programs that restore more connection.
    Investments in third places. Vocational programs. Expanded freshmen seats at colleges.
    Child tax credits. Negative income tax credits. A $25 minimum wage. A culture of mentorship.
    More men teaching in primary schools. Age gating of social media. Mandatory national service.
    And fiscal tax policies that stop the transfer of opportunity and prosperity from young to old.
    Each side wants to blame the other’s rhetoric or find a novel conspiracy. The issue is more boring
    and hiding in plain sight. The most dangerous person in the world is a lonely young man,
    and we are producing too many of them. Worse, we arm them with weapons that every other developed
    are instruments of war. The US is nearly impervious to foreign threats, but it’s waging war on itself.
    The frontline of this war is on our own soil, raging and largely ignored. The struggle of young men.
    Life is so rich.
    (soft music)
    [BLANK_AUDIO]

    As read by George Hahn.

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  • ‘Cultural Heroin’ and the Road to the Election

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    (upbeat music)
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    Support for the show comes from Into the Mix,
    a Ben and Jerry’s podcast about joy and justice
    produced with Vox Creative.
    Ainez Bordeaux is a self-described hell-raiser
    and she became an activist
    after being caught up in the criminal legal system
    when she couldn’t afford her bond.
    And without a trial,
    Ainez was sent to a St. Louis detention facility
    known as the Workhouse,
    notorious for its poor living conditions.
    Here How She and Other Advocates
    fought to shut it down and won
    on the first episode of this special
    three-part series out now.
    Subscribe to Into the Mix, a Ben and Jerry’s podcast.
    – Episode 308, 308 is the year
    I got belonging to Western Nebraska in 1908.
    The first time square ball drop occurred
    at Midnight Tree Story from New Years.
    I bought myself one of those health trackers.
    And while I haven’t run yet this year,
    I’ve masturbated for over 500 miles.
    – Go, go, go!
    (upbeat music)
    (upbeat music)
    – Welcome to the 308th episode of The Prop G Pod.
    Whenever I do one of these jokes,
    I immediately click stop
    and look at the reaction of our production team.
    ‘Cause what I want is I want them to be offended
    and horrified but sort of laughing under their breath.
    That’s when I know I’ve hit it.
    Other times they just turn on the cameras
    and they look at me like they’re horrified
    and I know I need to go back to the well.
    Anyways, in today’s episode,
    we’re mixing it up a little bit to start off the news.
    We’re bringing in our political Yoda, our sensei.
    Our sensei, our master of disaster,
    which is the political realm right now.
    In my opinion, the most interesting rising star
    in the world of political commentary, Jessica Tarlov.
    She’ll be reporting from the Republican National Convention
    in Milwaukee.
    We’ll hear her rapid fire take on the vibe of the convention,
    the aftermath of the attempted assassination on Trump.
    Other way, I was actually behind Melania at an airport
    right after it happened and I heard her screaming
    into a phone, you had one job, too soon?
    Too soon?
    Actually, supposedly it was a hit commissioned
    by the Democratic Party but they ordered it from Timu
    and it didn’t quite work out.
    Anyways, discount hits, not a good idea.
    So we’ll also be talking to Jessica
    about what we need to be thinking about
    leading up to the election.
    Afterwards, we’ll hear from Reid Hoffman
    about Biden’s decision to stay in the race,
    the state of AI and woke-ism and its place
    in American universities.
    I absolutely love Reid Hoffman.
    I think he is the conscience and the voice
    of the tech community and the tech leader we need,
    if you will.
    I’m just so impressed with Reid.
    But first, I know what you’re thinking.
    Where’s the dog?
    Where’s the dog?
    He was in Munich, he was in München at a beer garden
    watching England beat, who did we beat then?
    Netherlands, right?
    And then got so excited that I took my son to Berlin
    where we watched the finals of the Euros
    and we saw Spain go on to victory.
    An amazing game, good for Spain.
    I think they played the better match and deserved to win
    but we had just an unbelievable time following team England.
    The British people are just such a half empty group
    of people, they’re furious at what’s his face?
    Southgate, the manager, because they didn’t win
    and all they could talk about.
    I heard over and over on the way back
    is we can never win a trophy or tournament.
    For God’s sakes, they’ve gone to the final twice.
    And I mean, they just have such incredible talent.
    And I absolutely loved watching England play
    and I’m very grateful and not that any of them listened
    to my podcast, but my God, Cole Palmer.
    Jesus Christ was that exciting.
    They put the guy in a little bit too much of football here.
    They put the guy in and I think the 70 or 74th minute
    and within two minutes he scored a goal.
    So back from Berlin in New York, it’s about 140 degrees here
    but it’s always great to be back in the city.
    This is the start of my American summer.
    I’m back in the US of A.
    I go to Colorado next Saturday I think
    and then I go to off the coast of Massachusetts to Nantucket.
    Literally the widest place on earth, literally.
    I didn’t want to like it.
    I think of myself as being more kind of Euro trash
    and I went there 10 years ago
    and I’ve been every summer since it is beautiful.
    It’s essentially a sandbar in the Atlantic.
    You can let the kids go crazy.
    They can’t get into too much trouble
    because it’s an island, good food, just absolutely love it.
    Anyways, enough of my privilege.
    I want to end this on a little bit
    of a deeper, more thoughtful note.
    I did one of my favorite things in Berlin.
    I did something called Fat Tire Bike Tours.
    I’ve done this every time I’ve been in Berlin
    and they take you around to all these sites.
    And it’s obviously very focused on World War II
    and the wall coming down.
    And I just find that shit fascinating.
    And what was so exciting for me
    was my 13-year-old son came with me
    and they take you to Hitler’s Bunker,
    which is now a nondescript parking lot
    ’cause they don’t want to draw too much attention to it
    or turn it into any sort of shrine
    for when far-right fucking crazies start showing up
    and planting flowers or some shit like that.
    And they take you to a guard tower
    and the guard towers that were erected
    to basically shoot anybody that was trying
    to escape to the West,
    given that there was an incredible brain drain.
    And it was actually, the wall was actually
    for a short time, a good idea for East Germany
    distinct to the human rights violations
    because they were losing all of their human capital to,
    to the West, but this was just,
    it was just such a fascinating weird construct
    and quite frankly a flawed construct.
    But for example, when they had guards in the towers,
    they would switch them up and put them in different towers
    ’cause they were finding if they spent too much time together,
    they too would make plans to escape.
    And so they made sure that they didn’t get to know each other.
    But more than that, the thing that really struck me
    on these tours is that if you look at Germany
    and Prussia for the last few centuries,
    it’s been historically one of the most tolerant,
    progressive places in the world
    and appreciation for art, music,
    very accepting and tolerant of different religions
    and people from different backgrounds,
    thriving gay community, political discourse,
    celebration of world-class academics
    and appreciation for debate, democracy.
    And then it had this 12-year period
    where things really went sideways is the wrong word,
    really went dark.
    And for me, it’s a lesson that absolutely, in my view,
    that to believe that that can’t happen here
    is to ignore history.
    And I find that Americans are optimism
    is our greatest feature, but also our greatest flaw.
    And that is one of the impression
    that somehow our institutions would buttress us
    against some sort of demonization of immigrants,
    which I think is already sort of on a low burn right now,
    or that we would try and find scapegoats.
    And that’s the bad news.
    The good news is, if you look at Germany,
    it has, again, returned to the mean
    of where it has been through most of society.
    And that is an incredibly progressive, tolerant,
    interesting liberal democratic society.
    And it’s the economic engine of Europe.
    I love the whole “work hard, play hard” ethic in Germany.
    One of the things, examples that I just love about Germany
    is, I think in the U.S., we kind of bifurcate
    things for kids and things for adults.
    Disneyland is definitely for kids.
    It is the seventh circle of hell for adults.
    And then there’s places that are just adults only.
    And I think Germany does a great job of threading the needle.
    My favorite thing is the beer gardens there.
    There’ll be a beer garden and they’ll literally be trampolines.
    So use something for everybody.
    There’s the kids and mom and dad go grab a beer.
    I think Germany is a fantastic or wonderful culture.
    And every time I go there, I just have such a nice time.
    Anyways, Germany, an incredibly progressive
    and impressive society.
    But for 12 years, digress from that norm.
    And it happened fast.
    And it happened aggressively.
    And obviously, it happened violently.
    And there are a lot of lessons to be taken from that.
    And again, to believe that unless we remain steadfast
    and recognize that that can happen here, it will happen here.
    There’s no reason if it can happen in Germany
    based on their historical reference in the bookends
    of that society, then it can absolutely happen here.
    All right, let’s get Jessica on.
    – Breaking news, former president Donald Trump is safe
    and a 20-year-old shooter is dead
    after a shocking assassination attempt
    on the former president in Pennsylvania yesterday afternoon.
    – This afternoon, former president Donald Trump
    announced his pick for running mate,
    choosing Ohio Senator JD Vance
    to join him on the ticket.
    – Two-thirds of Americans say President Biden
    should step aside, and that includes 60% of Democrats.
    – So we are joined now by Jessica Tarloff.
    Jessica is a political analyst and a co-host on the five,
    Fox’s weeknight news program
    and a regular guest here on Prop G.
    She is in Milwaukee at the Republican National Convention.
    Jess, let’s kick off with,
    just give us a general sense of the vibe there.
    – Well, I first want to make clear to the listeners,
    I’m in an open environment,
    so if it’s a little noisy or the sound quality’s crappy,
    I apologize, but I’m in the Fox workspace
    at the convention center in the midst of it all,
    and it has been a crazy few days.
    I arrived on Saturday, first day back from maternity leave,
    and within half an hour of landing,
    there was the assassination attempt
    on former president Trump,
    and we were wall-to-wall through the evening,
    and then Sunday, getting into the swing of things,
    first segment back, talking about almost immediately,
    who’s to blame for this,
    everyone trying to jockey for their position,
    surrounded by people,
    very enthusiastic Trump supporters, as you can imagine.
    The great outfits are happening,
    the bedazzled hats, the cowboy boots, make America,
    everything again, t-shirts and paraphernalia,
    and then yesterday, first day back on the five,
    and it’s been intense, and a whirlwind,
    it’s very exciting to be here,
    but it’s a little scary, considering what happened,
    and I think that there’s an air of that everywhere,
    and everyone is feeling it, security is massive,
    I mean, everybody is here from Secret Service
    down to the local police,
    and that’s really what’s hanging in the air,
    I would say for everyone, is this teeny bit of fear,
    and then this massive excitement,
    very enthusiastic bunch, to say the least.
    – So Jess, this is difficult, or it’s difficult for me,
    but just trying to be as unemotional about this
    as possible, my sense is that the Trump campaign,
    in any race, has never had this much momentum right now,
    what are your thoughts?
    – It’s definitely a peak moment for them,
    and they’ve been through a lot,
    and it’s not just the sentiment behind them
    because of what happened,
    and obviously, everyone is relieved
    that he was not actually killed,
    and that the shooter wasn’t successful,
    but he had the Mar-a-Lago case dropped against him,
    Eileen Cannon, the judge in Florida,
    did that yesterday morning,
    right for the kickoff of the RNC,
    and he’s walking on air.
    It’s part of why he moved up the VP announcement,
    have J.D. Vance, who’s been a big hit
    around the convention here,
    J.D. Vance was Democrats’ top choice,
    in terms of who they wanted him to pick,
    ’cause he doesn’t bring a tremendous amount to the table,
    he doesn’t bring a state that Trump wasn’t gonna win,
    he doesn’t bring a set of policies that Trump didn’t have,
    he’s not more moderate than Trump.
    I feared it would be a Glen Youngkin,
    Marco Rubio, or a Nikki Haley,
    but definitely going in their direction,
    and Joe Biden, he had that good rally on Friday in Detroit,
    the interview with Lester Holt on Monday night
    was fine, but not enough to quiet everyone down,
    and I think if it’s a toss-up race right now,
    you’d have to at least go 51-49 in Trump’s favor.
    So yeah, I would agree with you
    that it’s with him right this moment.
    – So a couple of things right there, J.D. Vance,
    my sense is, it’s interesting that you said
    that that was the Democrats’ pick they were hoping for,
    my sense is that it’s actually a good pick for Trump.
    One, he’s handsome, two, he’s young,
    he’s a Marine veteran,
    and he’ll be a very effective attack dog
    for which is generally kind of one of the key roles
    for the VP, what are your thoughts on the pick distinct
    of what the Democrats wanted or didn’t want?
    – Well, I think that that’s all true,
    and right now what I’m focused on is the enthusiasm factor.
    So the race is still statistically tied,
    there were three major polls,
    our poll, the Fox poll, NBC, CBS,
    all within one to two points,
    that’s margin of error, we’re in a dead heat,
    the CBS battleground polls really interestingly,
    we’re also within the margin of error,
    and we had seen some with bigger distance
    that Biden was behind, kind of three, four points,
    versus being one to two points behind.
    So if you’re looking at that,
    and then you’re considering the VP pick,
    yes, that story is completely compelling,
    I was a hillbilly allergy liberal myself when that came out,
    I thought it was incredible,
    book better than the movie as it usually is,
    but JD Vance is not someone that’s likable,
    he’s not liked at home in Ohio,
    he’s not liked in the Senate,
    Mitt Romney, when he was being interviewed for something,
    said that there was like no one more detestable,
    I guess he forgot about Ted Cruz that day,
    but JD Vance is not someone
    that has warmed a lot of people up,
    and I think it is a signal to the future of the party,
    JD Vance at 39 years old,
    and I guess he’ll be 40 if they win by the time he’s elected,
    but it’s really a siren call that it’s MAGA now,
    and it’s MAGA in the future,
    and that’s the message that Donald Trump wants to send,
    and that’s a message that I think helps the Democrats
    that are managing to permeate the bubble
    about Project 2025,
    and what scariness lurks ahead for us
    if Donald Trump wins again,
    and JD Vance does nothing to kind of stop that,
    so that’s why I think that it’s a good pick
    if you are looking at it from the Democratic side.
    – Based on what you’re kind of feeling at the convention,
    do you have any sense of any policy shifts
    or messaging that you think they’re gonna go with
    based on just what the speakers are talking about?
    I mean, these things are pretty,
    these things are produced for TV,
    so they’re pretty deliberate.
    Any insight you can glean from their strategy?
    – At least from the Monday night,
    besides Trump showing up himself,
    the big deal was Sean O’Brien,
    the union, that union boss,
    and that he’s gonna speak at both conventions,
    and he came in there with a speech
    that you would normally think you’d see at the DNC,
    and he made it at the RNC,
    and he got more applause for certain things
    that I wouldn’t have expected,
    and he was more generous towards Donald Trump
    that I would have expected as well.
    You know, they try to be quote, “non-political,”
    but endorsements happen, and Joe Biden has made
    being on the side of the union workers
    a huge hallmark of his campaign, joining picket lines.
    He got, I think it’s $90 billion
    reimbursed into their pensions, for instance.
    The fact that he showed up here
    and that he spoke that passionately
    and said Trump was a really tough dude,
    which, yeah, I mean, he got shot at
    and managed to get himself together
    and then pump his fist, I get it,
    but that’s what really stuck out to me.
    That was the outlier, you know,
    in a sea of faces that you would typically expect
    at an RNC event.
    – Has anyone been a disaster in terms of the speakers?
    Like, the vibe in the room, did it ever go really flat?
    Was anyone sort of underwhelming in terms of the lineup?
    – Yeah, it was David Sacks, right?
    That’s his name, the venture capital guy
    who’s given a ton to J.D. Vance,
    and he kept waiting for applause or laughter,
    and none of it came because he just totally blew.
    So that was a big disappointment for people.
    But otherwise, everyone’s been pretty happy.
    I mean, I’ve been here, you know, from the morning tonight
    and people are just jazzed to be here.
    They’re excited when they’re listening
    to some rando dogcatcher from, you know,
    the middle of nowhere.
    So, you know, people are pumped,
    they’re pumped about Donald Trump,
    and I was reviewing all of the terrible things
    that J.D. Vance has said about Trump from the past,
    and one thing stuck out.
    – Comparing him to Hitler?
    – Well, no, that did stick out,
    and I made sure to mention that on TV.
    No, he called him cultural heroine.
    And I think that that’s really apt and accurate
    and not surprising coming from, you know,
    a very smart guy who wrote a fantastic book
    and got into himself in T.L. Law School,
    which is no easy feat.
    And that, I can feel that.
    And I’m obviously not going so far as to say, you know,
    people need to be deprogrammed.
    I know Democrats always get into trouble
    when they say things like that about Trump supporters,
    but people are addicted to the way he makes them feel.
    And this is like multiple arenas full of that addiction.
    – Do you sense that cult-like addiction atmosphere
    is more intense than you would expect
    at the Democratic Convention?
    – Well, I mean, if you just look at the polling
    on enthusiasm behind these candidates, yeah,
    I mean, the DNC would seem more like a Tea Party, right?
    And this is like a rager at a dive bar
    where everyone is having the time of their lives
    doing karaoke, right?
    But at this particular moment,
    I don’t see the Democrat enthusiasm
    coming anywhere to match this.
    And I was listening to Frank Luntz talk about
    what he’s seeing in the polling and focus grouping
    post-assassination attempt.
    And he said he doesn’t think the race is going to move.
    And I agree with that.
    But where you will see the movement is in the enthusiasm.
    And we’re looking at a situation
    where every single Trump voter is going to show up.
    And we have to be sure
    that every Democratic voter shows up.
    And I certainly can’t guarantee something like that
    at this particular moment.
    – Talk a little bit about Project 2025
    or what I refer to affectionately
    as season seven of The Handmaid’s Tale.
    Are they, do you get the sense
    they’re trying to distance themselves from that?
    – Oh, yeah.
    – Are there folks, say more?
    – Well, Trump put out on Truth Social.
    I don’t know anything about it.
    I mean, it’s saying that he’s mentioned 312 times in
    that everybody who worked with him
    has played an integral role in shaping.
    He says he knows nothing of.
    And I think that that’s one of the points
    that Democrats have to keep hammering.
    Finally, the polling is reflecting an awareness for this,
    which I have to say is, you know,
    no credit to the media on this.
    They have not been amplifying it, I think,
    to the level that it deserves.
    When you think about that this is a man
    who has remade the courts, right?
    The Supreme Court has gone basically forever more.
    And if Trump wins again, you know,
    you could see a couple justices just retiring, right?
    To let him get in another Amy Coney Barrett or two.
    But he has nothing to hold him back, right?
    This is the revenge term.
    He has four years to do whatever he wants.
    And he’s made clear multiple times
    what it is that he wants to do.
    We know where he stands on immigration.
    We know where he stands on bodily autonomy,
    that he’s fine.
    If you say leave it up to the states,
    that means that it’s just fine.
    Like in J.D. Vance’s home state,
    to have such a prohibitive abortion ban
    that a 10-year-old who got raped
    has to go to Indiana for care.
    So I think that we have to do a better job
    talking about Project 2025.
    All the time it should be more than 50% of people
    who know what it is.
    But the fact that Trump said,
    I don’t know anything about this,
    means that he’s scared shitless
    about the impact of this on the election.
    – What impact, if any, will the RNC have
    on Biden’s campaign?
    It feels as if the calls to the president
    to withdraw from the race have,
    at least there’s been sort of a pause on it.
    Do you think it picks back up
    and any thoughts on where that stands?
    – Well, there are two big reports
    in the last couple of days.
    There’s Adam Schiff at a fundraiser
    where he said, “If Biden’s top of the ticket,
    “I think we lose the house.”
    And we don’t regain the house and we lose the Senate.
    And then on Monday, Politico was reporting,
    I think it was Rachel Bates’ piece,
    that Nancy Pelosi’s been working the phones.
    That she cannot stand this chatter
    that Democrats don’t care about what happens.
    I’m sure you saw this in Axios,
    that they’ve resigned themselves to another Trump term
    and Nancy Pelosi is not having any of that.
    And if there’s one consistency in life,
    it’s that if Nancy’s Pelosi is working against you,
    you’re in a lot of trouble.
    So I think that it might be on the surface quiet
    and a lot of that has to do with the assassination attempt.
    I mean, you have to give someone at least a few minutes
    after something like that happens,
    but I don’t think that it’s really quiet.
    And what he aimed to achieve with the Lester Holt interview,
    I think felt short.
    And one of the answers that stood out the most to me,
    besides the conversation about the bull’s eye,
    you know, putting Trump in the bull’s eye
    and the rhetoric quote coming from both sides,
    which I don’t think these are comparable at all.
    But Lester Holt asked him about, you know,
    who’s making the decision if you were to step aside.
    And he just said me.
    And it sounds like a man alone on an island, right?
    And maybe Hunter and Joe are there,
    but I had never heard him talk that way.
    And he was defiant, you know, saying me.
    And that isn’t the usual ethos of Joe Biden
    and that is certainly not the ethos of the Democratic Party
    or what we purport to be.
    And there are rumors that the DNC might hold an early vote
    on making him the nominee and do that virtually.
    People are pushing back against that idea.
    I think it would be a big mistake
    to make people feel like post-debate.
    They don’t have any agency in what happens
    going forward to November.
    – Jessica Tarlove is a political analyst
    and a co-host on the five, Fox’s weeknight news program.
    She joined us from the Republican National Convention
    in Milwaukee.
    Jess, as always, it’s great to hear from you
    and enjoy yourself.
    And we’ll look forward to catching up soon.
    – Absolutely, thank you for having me.
    – We’ll be right back for our conversation with Reed Hoffman.
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    – Welcome back, here’s our conversation with Reed Hoffman,
    founder of LinkedIn, investor and strategist.
    – Reed, where does this podcast find you?
    – I am just outside Seattle.
    – So, Biden question mark, you’re sort of an,
    you’ve become sort of this elder statesman
    of the tech community and what I’ll call
    center-left politics.
    What are your thoughts on the state of play
    around the calls for Biden or the concern,
    I won’t even say calls,
    the concerns around the Biden campaign right now?
    – Well, I mean, he obviously had a,
    frankly, just disastrous debate performance
    in terms of kind of what I think my family
    would call senior moments in the thing.
    And that obviously legitimately causes a bunch of concern.
    I obviously, if you kind of asked me,
    which of my more concerned about a bad debate
    with senior moments or a lying felon
    who doesn’t care about the country,
    I have a clear point of view about which one
    is more disqualifying for being president.
    But it’s obviously, I don’t mean to paper over the concerns
    because I think probably everybody would prefer
    people who are 20 years younger
    contending for the presidency.
    – It’s just a question of do you express your age
    through slowness, but kindness and care or demented lying?
    – So a lot of this comes down to,
    I mean, we’ll know this will either happen or not happen,
    I think in the next couple of weeks, just logistically,
    I mean, time is on both Biden and Trump’s side now,
    that if Biden, for whatever reason,
    doesn’t succumb to the pressure or,
    I mean, at some point it becomes logistically infeasible
    to replace him, right?
    And I think his view right now is perception is,
    right now the path to presidency would be,
    I’m not him, meaning Trump.
    The thing that I think would force him out,
    and I’m curious if you believe this is true,
    is if there was a dramatic reduction in donor money.
    And you’re a whale, you are in your flight,
    you’re out of rare altitude,
    both in terms of your own personal giving,
    but also the people you know.
    I’m when what, I bucket the fundraising into whales,
    such as yourself, porpoises, such as myself,
    they give tens of thousands, but not millions.
    And then the small, you know, small money donors,
    they call them minnows, but a lot of minnows
    can make up, you know, a formidable force.
    But what I see is the porpoises are in full revolt.
    The people I speak to are not only signing letters
    to try and ask to get them to step down,
    but starting to try and think about the next wave of candidates
    and commit money to supporting them.
    What is happening among the whales
    in terms of their giving, are they holding back,
    or are they taking a wait and see attitude?
    Are they rallying around the president?
    What’s going on at your altitude?
    – I would say that they’re just like the porpoises.
    And you know, I’d actually rather be, you know,
    in the, in this, in the bestiary,
    I’d rather be, you know, you porpoises on the dolphin.
    – You’d rather be flipper?
    – Yes, exactly.
    But I would say that it’s the same, you know,
    amongst the whales, there’s a deep concern
    about if you’re showing fatigue now,
    and it’s four months of a very grueling path,
    you know, what does that look like?
    And does that give Americans, you know,
    not the right sense of what the vigor of, you know,
    I care about kind of everyday Americans,
    and I care about, you know, people other than myself,
    you know, what does that present like?
    And I’d say that the whales are also,
    wait and see is probably too passive,
    but very concerned with what the forward path looks like.
    And so therefore are, you know,
    I’d say donations have slowed down a lot from that.
    Now, on the other hand, of course, you know,
    one of the things that was very interesting to me
    about kind of looking at the post-debate
    was how much grassroots went way up.
    And it may be, you know, a function of, you know,
    seeing Biden as easy as he is, a very decent man
    who cares about other people, you know,
    so I always worry a little bit about,
    you know, what the perspectives are,
    and make sure that you can see, you know,
    what is the everyday American, or the youth perspectives,
    and not just, you know, kind of from where I sit.
    – But to put a fine point out,
    you’re one of the deepest voices
    in the Democratic Party right now.
    People listen to you, Reed.
    Where are you today?
    Do you feel the best course of action
    would be to mature, battle test,
    and support and rally around another candidate,
    or for us to stop this and rally around Biden?
    – Well, I would like to see Biden show the vigor
    of campaigning that he is gonna need to see.
    It’s not just like the ABC interview,
    but maybe call it the ABC interview every day.
    If we see that, then I think we should be, you know,
    rallying around Biden and stopping this discussion.
    If we don’t see that, if this is just the, you know,
    look, you know, he’s dedicated his entire life
    to public service, this is everything he’s done,
    and it’s contributing massively.
    But if it was like, look, I can only imagine
    what running at his age is like.
    It was like, look, I’m too tired for this.
    Then it’s like, then I think we should, you know,
    kind of open up the field.
    – Yeah, but you do still think it’s a possibility
    that he can demonstrate that type of vigor
    in a short enough time to give people an option
    that it’s not a run out the clock strategy
    that you think that they’re–
    – No, I would oppose a run out the clock strategy.
    My voice, and as much as, you know,
    my voice matters in any of this stuff,
    is come be vigorous now.
    – You wrote a pretty powerful piece.
    I think I read it in The Economist talking about
    that Silicon Valley business leaders
    who are endorsing Trump because they believe
    he is better for business.
    What is the sentiment you’ve been hearing,
    and how exactly, why do you think Trump is bad for business?
    – So one of the things, I think that people kind of say,
    oh, it’s obvious that Trump’s better for business
    ’cause he’s a business person, he lowers regulation,
    he’s lower taxes, all the classic things that, you know,
    people say, hey, that’s good for business.
    But what they miss is what’s fundamentally critical
    for business is kind of a stable society,
    a rule of law society, you know,
    kind of open markets and good relationships
    with other countries for, you know,
    kind of products and services.
    And in all of that, Trump is essentially a disaster.
    And so part of the reason I wrote this piece
    for business people was to say, don’t, you know,
    kind of think, oh, 1% or 2% differences
    in tax rates matter.
    Don’t think that, look, and I actually appreciate,
    it’s one of the things that people say,
    are you objective about Trump?
    And I say, yeah, actually, I think one of the things
    that he did well was to say, hey,
    if you want a new regulation, remove an old regulation.
    I think that’s a good refactoring of regulation stance,
    but don’t think that’s what’s most important for business.
    What’s actually, in fact, important for business
    is kind of rule of law and stability,
    and Trump basically attacks all of that.
    And I kind of came a professional age in the Valley,
    but I don’t feel as if I’m in touch with it
    because I’ve been gone so long.
    And I was, and this might be a reductive analysis,
    but I find there’s this frightening vein,
    or ideology in the Valley,
    of kind of this techno-libertarian notion
    that government is bad,
    and that if we could just let smarter people run the organic,
    you know, run the company, defer to the markets,
    and specifically if the markets could kind of defer
    to the technology leaders, that we’d all be better off.
    And I find it very disconcerting given that I don’t think
    these individuals recognize how blessed they are
    by some of the underpinnings of M Blessings rule of law,
    an incredible business ecosystem.
    Am I being dramatic here?
    Is there sort of a concerning vein
    of this sort of techno-libertarian within the Valley?
    – No, I don’t think you’re being dramatic.
    I basically completely agree.
    It’s one of the reasons why, you know,
    kind of I argue for the value of government,
    the value of better government.
    There’s never great government.
    There’s always inefficiencies there,
    but the difference between, you know,
    call it B and B plus can actually make a very big difference.
    And I think the libertarian thing, which by the way,
    comes from, in some places,
    comes from places that are not terrible,
    which is like, hey, we can build amazing new companies,
    amazing new technologies.
    Those can make a very big difference.
    I agree with all of that very strongly.
    But the notion that it’s like,
    oh, government is bad or gets in the way,
    it’s like, well, actually, in fact,
    if you look at everything
    that our Silicon Valley entrepreneurship, you know,
    can create comes from many different platforms
    that government has enabled.
    Isn’t just rule of law, isn’t just a piece of society,
    isn’t just a, you know, kind of university system
    and technology system and funding of these technologies
    that then, you know, get created into companies,
    but it’s the very kind of the system
    that we can deploy our products and services
    and hire talent and offer, you know,
    kind of stock, you know, for sale.
    And all of that’s within a government regulated environment.
    So I frequently argue vociferously with, you know,
    what I refer to as techno libertarians.
    – So let’s switch to AI.
    Where are you most bearish and bullish
    when it comes to use cases and applications?
    – Let’s see, so on the bearish side,
    what I would say is that there’s a couple of things.
    One is it’s hard to know exactly
    where to be bearish over time
    because I think Ethan Mulligan, co-intelligence,
    you know, said something, you know, that’s a good maxim,
    which is the worst AI you’re ever gonna use
    as the AI you’re using today.
    And there’s a bunch of things
    that are kind of being developed.
    Now, I think people being overly Pollyannish about,
    oh, you know, AI is gonna solve fusion for us in three years
    is I think, you know, a mistake in various ways.
    In the positive sense, I think that it’s funny,
    even with all the hype,
    I think it’s to some degree understated,
    relative to if you think about the fact
    we are language creatures
    and that everything we do is in language
    and you have it minimum a language amplifier.
    So you say, well, I have a steel manufacturing company,
    what’s AI gonna do for me?
    It’s like, well, but you have sales, you have manufacturing,
    you have financial analysis, you have meetings,
    you have decisions, all of which there’s gonna be
    essentially co-pilots for.
    And so I’m very bullish across all of this productivity.
    That doesn’t mean that it doesn’t come without challenges
    in terms of how jobs change and all the rest.
    But I think that the amplification here is really big.
    And what’s more, it doesn’t even get to,
    like the two kind of cases that I usually use is
    I have a line of sight to having a tutor
    and a medical assistant on every smartphone
    that is kind of there for every human being
    who has access to a smartphone,
    which is amazing human elevation.
    But I also think it gets interesting in terms of,
    what does it mean for drug discovery
    or other kinds of places where the deeper uses
    of language and predict the next token
    can actually apply to things that make a huge difference
    for the quality of human life.
    So overly very, very bullish bearish
    on Pollyanna short-term claims.
    – One of the concerns I have, and I think it did some number
    of people share is that,
    technology is either go to existing players or new players.
    And it feels with AI, that while there’s some new brands,
    it feels as if the majority of the spoils
    are going to not only existing players,
    but a small number of existing players.
    You were a co-founder and inflection,
    which got, my understanding has got sold to open AI.
    You’re on the board of Microsoft,
    Amazon’s an investor in Anthropic.
    It all feels very incestuous.
    Are you at all worried about the concentration
    or increased concentration of wealth and power
    to even a smaller circle of companies and individuals
    and what is probably the next big technology?
    – Well, there’s multiple questions there.
    So I’m gonna kind of unpack them a little bit.
    One, inflection is still a going company.
    I had a board meeting a couple of weeks ago.
    It did a business deal with Microsoft,
    which involved a license and Mustafa Suleiman went over
    to build agents for them,
    ’cause we pivoted away from agents to be-to-be stuff.
    And so there’ll be a bunch of stuff announced.
    That’s just a small thing.
    Well, I actually think the actual truth of the matter
    is the rewards, everyone’s investing pretty heavily,
    but the rewards haven’t really started showing up yet.
    I’m not concerned by that.
    Some people then say, well, hey, doing all this investment,
    why isn’t the rewards showed up this quarter?
    And the answer is actually, in fact,
    the most interesting things are the things
    that compound over 10 years versus, you know,
    something makes a difference and, you know,
    you invest this year and your profit margin
    goes up next year.
    So I don’t think the rewards actually have been
    divided up that much yet.
    Now, what is showing is that one part of the revolution
    that we’re in here is the scale compute revolution.
    And the ability to drive scale compute
    is mostly not very much of a startup gain.
    There’s a reason why, or if it is a startup gain,
    like OpenAI, it’s adjacent to large companies.
    So you got OpenAI, which is adjacent to Microsoft.
    You’ve got Anthropic, which is adjacent to Amazon,
    you know, et cetera, as essentially what’s driving them.
    And that does mean that there is some limitation there.
    That doesn’t mean that that’s a necessary critical problem
    because there’s all kinds of places where you say,
    well, I would like to, you know,
    create a startup of a desktop search company
    and you can’t really do that.
    What you want for the vulnerability of these companies
    to be taken as by, with new technologies, new platforms,
    new other kinds of things as well as doing it,
    not necessarily by going at their strengths.
    Now, that being said, though,
    I think the deepest, most implicit part of your question is,
    is there startup opportunity here
    that can build new pillars of strength
    that are not being subsumed
    with smaller number of companies?
    And I think the answer is absolutely yes.
    I think that startups not only can use a ton
    of the different models that are being built,
    but also, you know, they’re gonna have the opportunities
    to build, you know, pretty amazing companies
    because we have multiple large language models
    that are competing with each other.
    Like if it was just one large language model,
    that would be a concern,
    ’cause then you kind of say,
    “Hey, we’re gonna try to grab all the economics ourselves,”
    but you not only have Google and Microsoft and OpenAI
    competing with each other,
    but you have multiple other folks
    trying to come into the entry there,
    and you can look at what Anthropic and Amazon are doing.
    And so I think there’s a lot of startup opportunity,
    and I’m putting my money where my mouth is
    as an investor at Greylock and personally,
    and starting Inflection and all of this.
    So I actually think that, you know, the very last point,
    and I think this is probably the deepest point
    that you and I have some interesting zones,
    or one of the deep points,
    I don’t know if it’s the deepest of conflict then,
    is that I actually think we’re, you know,
    call it five to seven large tech companies
    heading the 15, not five to seven heading the three.
    – You think that this is gonna create,
    that will birth new giants here,
    and that the ecosystem will actually,
    it’s not gonna be one apex predator killing everybody,
    or you don’t think it’s gonna be consolidation,
    you think that it’ll spawn new giants?
    – Exactly.
    – Do you think there’s a bit of a bubble?
    I don’t, it’s hard to argue that AI
    is gonna have a seminal impact on business
    and the economy and society.
    Do you think we might be in a bit of a bubble
    as it relates to valuations?
    – Well, it’s definitely, which we always get
    in new technology waves, which is people go,
    we know there’s gonna be huge impacts
    to embedding on tons of companies,
    and so it creates a valuation increase
    across a lot of companies.
    And then in retrospect, you go,
    well, that was clearly a bubble
    because a number of those companies,
    that valuation increase was incorrect, right?
    But on the other hand, part of how the market functions
    is to say, hey, we know we’re all kind of putting
    our bets on which ones are gonna be,
    which ones are gonna be the enduring big ones,
    which are gonna be the new big ones,
    and which ones are not gonna hit the wave.
    And so I think to some degree,
    there’s a significant number of companies,
    which will show in retrospect,
    have their valuations bit up in ways that I disagree with.
    I didn’t buy, right?
    I don’t do shorts, I just don’t think,
    I build things for long,
    but I kind of don’t buy those valuations.
    On the other hand, of course,
    the whole game is, well,
    which ones actually have copped this?
    And this will be the next technological wave
    that’s bigger than, you know,
    the internet, mobile, cloud competing,
    ’cause it compounds all of them.
    It amplifies them to the next level.
    – There’s, people have outlined
    a bunch of potential dangers from AI,
    whether it’s sentient or concentration
    or self-healing weapons,
    or, you know, it being used as for mis and disinformation.
    What risks do you think are underhyped if any,
    and which ones are overhyped?
    – So I think the ones that are underhyped are,
    and tend to get masked by a number of things,
    is this is, you know, with my book impromptu,
    I basically said this is amplification intelligence,
    is what I’m looking at versus artificial intelligence
    and kind of human amplification,
    and bad actors being amplified.
    So whether it’s cyber criminals, terrorists, rogue states,
    you know, it’s one of the things that, you know,
    has me, you know, very concerned about what these things are,
    like in the kind of the, in the cyberspace realm,
    to use a dated term, but to, you know,
    we have a bunch of equivalent of open warfare going on,
    you know, across the internet in hacking,
    and in security where, you know,
    governments aren’t really doing much about that,
    and you know, what can AI do to amplify that, I think, is,
    I don’t mean governments collectively,
    as in kind of, you know, international treaties
    that are being written and enforced.
    And so I think that’s the underhyped,
    and the area that I’m most focused on.
    I think the overhyped one is kind of versions
    of the super intelligent robots are coming for us,
    ’cause I think it’s the humans with the robots
    that are much more concerning immediately,
    than the super intelligent robots.
    And I’ll give you a small example.
    Last year, I was asked to sign this 22-word statement
    that a bunch of people I love and trust and admire signed,
    which is, you know, AI is an existential risk
    along with climate change, pandemic, et cetera.
    And the reason I didn’t is ’cause AI is also
    the only one of this list that has massive things
    in the positive buckets, how to solve pandemic,
    how to be looking for asteroids,
    how to be, you know, computing, you know, energy grids
    to try to reduce, you know, carbon footprints
    and energy chains.
    And so I actually think the whole existential risk
    super intelligence is not an absolute zero percent.
    But if you asked me to say,
    is super intelligence risk of AI more likely all a terminator,
    or is the earth being hit by an asteroid more likely?
    I’m not sure which one I would,
    which I would put as more likely.
    – If you were to advise, hopefully, the Biden
    or a blue administration around AI,
    do you think that they’re headed in the right direction
    in terms of, I mean, so far there really hasn’t been
    regulation, there’s been sort of like this regulation
    manifesto of like, this is what we might do.
    What would your advice be around government involvement
    or regulation or lack thereof with respect to AI?
    – Well, I think Biden administration has done a,
    like a really good process, which is first,
    bring the companies in, sweat them for voluntary commitments,
    you know, work really hard, push them very hard on that,
    see what set of things is possibly doable,
    then put that into an executive order within a frame,
    be focused and limited, like, okay, what happens
    with, you know, high compute models and so forth,
    rather than trying to solve every imagined problem.
    ‘Cause, you know, for example, if someone come to you
    and say, okay, I want approval for a two-ton death machine
    that someone can get drunk and run over a kid with,
    they’d say, well, here’s a hundred things you should fix
    and one or two of them, seat belts, you know,
    you know, airbags or should be on the list,
    but then there’s a hundred other things.
    So you only really get there by working your way through it.
    So I think the administration, you know,
    has done a good process on this.
    And I do think that our tool set for navigating
    both great opportunity and human elevation
    and preventing the challenges get stronger
    as we’re building stuff.
    And so I think we want to be very focused and limited
    and until we actually, you know,
    are really blocking the real harms.
    We’ll be right back.
    – This episode is brought to you by PC Optimum.
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    – DQ presents, picture this.
    Picture the DQ freezer home to all the Blizzard flavors
    of the past.
    Picture it opening to bring back
    the Salted Caramel Truffle Blizzard for a limited time.
    Picture that Salted Caramel Truffle Blizzard in your hands.
    It’s all yours.
    No, really, it’s all yours.
    This treat is too good to share.
    Everyone will have to get one for themselves.
    Hurry in to get this flavor before the DQ freezer closes.
    DQ, happy tastes good.
    – Put your hands together for Lady Raven.
    – Dad, thank you.
    This is literally the best day of my life.
    – On August 2nd.
    – What’s with all the police trucks outside?
    – You know, the butcher goes around just chopping people up.
    – Comes a new M. Night Shyamalan experience.
    – The fed’s heard he’s gonna be here to date.
    – Josh Hartnett.
    – I’m in control.
    (screaming)
    – And Salika as Lady Raven.
    – This whole concert, it’s a trap.
    – Trap, directed by M. Night Shyamalan.
    William Theaters, August 2nd.
    – You’re an investor,
    and a couple of the things you’ve invested in
    are you funded Eugene Carroll’s defamation suit
    against President Trump,
    and now you’re helping finance Smartmatic’s case.
    I’m just curious, it feels like it’s a new wave of investing.
    I don’t know if you pioneered it, or Peter Thiel did,
    but it’s a very interesting means of I call it investing.
    I don’t know what the term would be,
    but walk us through your thought process
    for why you decided to do it,
    and talk a little bit about the Smartmatic case
    and why you’ve decided to get behind it.
    – It feels a little strange,
    and I wish I didn’t feel the need
    to be doing what I was doing here,
    but it’s very much rule of law
    and high functioning democracy.
    And part of the thing here is to say,
    look, we should always be resolved
    to as strong a rule of law system as possible.
    Now, part of that, by the way, for example,
    every single scholarly and any source of integrity
    says the 2020 election was fair, right?
    It was fair, doesn’t mean it was perfect,
    but it was fair to the standards
    of every other election in modern history.
    And so then you get to, okay, well,
    people who attack that are trying to degrade our democracy,
    degrade our trust and belief in rule of law.
    And by the way, that trust is part of how it functions.
    And so supporting the rule of law
    is the thing that has been,
    I’d say fundamental across my democracy investing,
    but also in terms of saying,
    hey, let’s have the legal system work,
    because one of the things that, as you saw with,
    for example, the Dominion suit against Fox
    is unlike when you’re kind of litigating
    just a freedom of speech political thing,
    people can lie through their teeth
    and have no consequences when you’re lying through your teeth
    and saying, hey, the 2020 election was stolen
    and your texts show that you’re lying through your teeth.
    And that that’s the influence that you,
    as a news media organization,
    are having upon the culture, beliefs, et cetera, society,
    in a commercial case,
    you’re allowed to be held accountable by a jury,
    by a system of law, by depositions and inquiry,
    by showing what your actual communications are
    to each other about how you’re lying with this.
    And I think that’s part of what’s really important.
    And so people say, wow, but that’s,
    I’ve heard the clear, that’s lawfare.
    And it’s like, look, the whole point about our legal system
    and having 12 jurors, like for example,
    the 12 jurors who convicted Donald Trump unanimously
    of 34 felonies on doing hush money payments
    and covering it up for political purposes,
    for sleeping with a porn star,
    both the prosecutor attorneys and the defense attorneys
    helped select the journey.
    There were probably several Trump voting jurists
    amongst that, you know, a newest thing.
    And one of them even said
    that they get a lot of their news from Truth Social.
    And that’s a jury system.
    And so the rule of law in a jury system
    is the thing that I’m very much supportive of.
    And investing might be the right term,
    but it’s really investing for truth, right?
    And the jury system is a proxy for getting the truth.
    – I apologize for hopping around here,
    but I wrote down a series of questions
    and wanted your thoughts on.
    I’m just really curious to get your thoughts
    on what you or your general impressions
    and what you think can and should be done
    regarding some of the activities we’ve had
    on some of our elite universities.
    And if you think that government
    or the federal government should be playing
    a more active role, if this is something
    that is a signal of something deeper
    and more mendacious and more troubling in the US,
    but I’m curious what Reed Hoffman’s thoughts were
    when you saw what was going on on our campuses.
    – Well, I’ve been concerned about it for a number of years
    and that same techno libertarian group,
    yells about wokeism very loudly.
    And I, by the way, agree.
    I think that the point of the university
    is to be intellectually challenged.
    It’s part of what I loved about my understanding
    of it about my undergraduate at Stanford,
    where Peter Thiel and I would argue
    a tremendous amount and so forth.
    And I think that a lot of that lack of kind of rigor
    and thinking is a problem.
    Like, for example, the most idiotic thing
    that I think I’ve heard said out of someone on the campuses,
    “From the river to the sea, I’m anti-genocide.”
    And you’re like, “From the river to the sea
    is a genocidal comment.
    You may not be informed enough to know.”
    Like, understand that there’s kind of genocide and abuse
    in lots of different vectors here,
    and it’s very complicated.
    And that, like, defending the fact that we have centuries,
    not just World War II of genocide,
    masking and anti-Semitism and a lot of the way
    that various Arab influences,
    including the Iranian sponsorship of the Hamas attack,
    is based on genocidal impulses,
    like, be a little bit more educated and informed
    and sophisticated in your compassion.
    – So as we wrap up here,
    and you’ve been generous with your time, Reed,
    you’ve checked a lot of boxes.
    It sounds like you have a really positive relationship
    with your spouse.
    You’re obviously hugely successful professionally
    and economically.
    You have a lot of influence on a national stage.
    Like, what boxes are left for you?
    If you think in 10 or 20 years, there’s a few things,
    a few boxes I’d like to check,
    either an indelible link, things you’ve already done,
    but you wanna do more of, or new boxes.
    What are those things?
    – Well, I mean, every major public interest technology thing
    in Silicon Valley, I’ve been somehow associated with.
    Usually, or, you know, like it’s, you know,
    Board of Kiva, Board of Mozilla, et cetera,
    ’cause they’re trying to figure out
    how we build technology, scale technology
    for society is an irrelevant thing.
    Also, you know, helping the folks who stood up,
    the USDS and US Digital Service and, you know, CTO office.
    So I think technology for humanity and society
    continues to be a very strong interest.
    And how do we do that?
    And by the way, I’m not anti-corporation.
    I’m just wanna get broader than, right,
    as a way of doing it.
    I also think that the notions of, you know,
    kind of like, you know, once upon a time,
    I was thinking about, you know,
    kind of questions around philosophy
    and kind of how do we know who we are as human beings
    and as society, who we should be.
    And like, for example, a question
    on artificial intelligence is how does it
    change our epistemology?
    I mean, I think, you know, a lot of our epistemology
    has been driven by the printing press and books
    and kind of sharing information that way.
    What kind of new knowledge artifacts will, you know,
    AIs be an engender?
    And what does that mean for what is to be human
    and kind of philosophy?
    And those would be some gestures at some stuff
    that I’m, you know, continuing to work on.
    But, you know, part of, I think,
    what it can be amazing about life is, you know,
    discovering something that is, ah, you know,
    it’s this thing that I should be doing
    and so staying active in order to find those.
    – And final question, Reed.
    A lot of young men listen to this podcast
    and I know you don’t have kids,
    but you’ve been married for 20 years.
    What advice would you have to young men
    who are recently married about being a good partner?
    – You know, I think it’s to be serious about it,
    to think every week, every month,
    how could I be a better partner,
    have conversations and explosive conversations with it?
    You know, sometimes people find that very awkward,
    but you kind of like, hey, we have, call it, you know,
    a date night a month, where we talk about like,
    how could we be better with each other
    in the relationship and allow, you know, like,
    yeah, this didn’t kind of work that well
    and this could be better and so forth.
    And to bring that thing just like you get better
    at everything else that involves care, intent, skills,
    and bring that.
    – That’s great.
    Reed Hoffman is an accomplished entrepreneur,
    investor and strategist.
    He’s been a Greylock where he focuses
    on early stage investing since 2009.
    Reed is also the co-author of Blitzscaling
    and several New York Times bestselling books,
    including “The Startup of You” and “The Alliance”
    and “Masters of Scale.”
    He also hosts the podcast “Masters of Scale.”
    His two main priorities these days
    are one, using AI to benefit humanity
    and two, protecting US democracy.
    He joins us from his home in the great state of Washington.
    Reed, you are an outstanding voice for the tech community
    and a really, really wonderful role model
    for young tech business leaders.
    Very much appreciate you and appreciate your time today.
    – Well, likewise and thank you.
    I love what you’re doing and, you know,
    whatever I can do to help.
    – Thanks very much, Reed.
    (upbeat music)
    – Algebra of happiness.
    There’s so many conspiracy theories
    or people are trying to draw so many hollow
    or somewhat specious conclusions or lessons learned
    from the attempted assassination of President Trump.
    And the thing that immediately struck me
    was that there’s this graphic showing
    that if he had just rotated his head
    two inches clockwise versus two inches counterclockwise,
    the bullet would have penetrated a skull in his brain
    and he’d be dead.
    I mean, this is just your life,
    wherever you are right now,
    is a series of small, random happenings,
    fractions and inches that determine where you are today.
    And what I would suggest you do and I’m trying to do
    is just take stock of all the wonderful things in your life,
    whether it’s you have some people in your life
    that love you and more importantly, let you love them,
    whether you live in a democracy,
    whether you have opportunity to kind of pursue
    what you wanna do, whether you have, you know,
    you have rights, you have some economic security,
    whatever it might be, your blessings,
    recognize that your blessings,
    a lot of them aren’t your fault
    and are a function of a series of fractions
    and inches and things that you may not even register
    at the time around how lucky you are.
    And at the same time, when things go poorly recognized,
    it’s a series of small things that are small happenings
    that were outside of your control
    and to forgive yourself.
    I’ve thought literally up until recently,
    up until my kind of 40s and 50s
    that all of the good things in my life were 90% me
    and 10% the market
    and all of the bad things that happened to me
    were 10% me and 90% the market.
    The reality is it’s probably somewhere around 51%
    things outside of your control and 49% you.
    And what’s the learning here
    when things are going really well, be humble
    and when things aren’t going well, forgive yourself.
    (upbeat music)
    This episode was produced by Caroline Shagren,
    Jennifer Sanchez is our associate producer
    and Drew Burroughs is our technical director.
    Thank you for listening to the PropGee Pod
    from the Box Media Podcast Network.
    We will catch you on Saturday
    for No Mercy, No Malice as read by George Hahn.
    And please follow our PropGee Markets Pod
    wherever you get your pods for new episodes
    every Monday and Thursday.
    Support for the show comes from Into the Mix,
    a Ben and Jerry’s podcast about joy and justice
    produced with Vox Creative.
    Into the Mix is back for a new season
    and welcomes you in with four new stories
    that take listeners beyond the headlines
    and into the lives of ordinary people
    fighting for justice in their communities.
    Starting with Aynes Bordeaux,
    an activist and St. Louis native
    who fought to shut down the workhouse
    and notorious pretrial detention center
    that she says functioned like a debtor’s prison.
    Subscribe to Into the Mix, a Ben and Jerry’s podcast
    to listen to the first episode
    of this special three-part series out now.
    [BLANK_AUDIO]

    Two guests join us today. First up, Jessica Tarlov reports live from the RNC. We hear about the overall vibe, the aftermath of the attempted assassination of Trump, and what we need to think about leading up to the election. Follow Jessica and her reporting, @JessicaTarlov. 

    Afterward, we hear from Reid Hoffman about Biden’s decision to stay in the presidential race, the state of AI, and “woke-ism” and its place in American universities. 

    We also get an update on Scott’s whereabouts. 

    Algebra of Happiness: be humble & forgive yourself. 

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  • What Role Does Airbnb Play in Housing Affordability? The Danger of Microplastics, and Raising American Kids in the UK

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    What Role Does Airbnb Play in Housing Affordability? The Danger of Microplastics, and Raising American Kids in the UK
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    What Role Does Airbnb Play in Housing Affordability? The Danger of Microplastics, and Raising American Kids in the UK
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    Support for the show comes from Farragamo. When a product is made in Italy chances are
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    almost a hundred years the name Farragamo has been synonymous with luxury and all Farragamo
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    Welcome to the PropG pods office hours. This is the part of the show where we answer questions
    about business big tech entrepreneurship and whatever else is on your mind.
    Hey PropG.
    Hey Scott and team.
    Hey Scott.
    Hi PropG.
    Hey PropG.
    And last week’s office hours we answered your questions about China’s EV market how we run
    our PropG media business and how to rich.
    No one does China like China. I wish I had figured out earlier that my core confidence
    is storytelling so this all sort of bubbled up to media company but I didn’t want to take
    outside capital because I didn’t want to have the pressure of trying to get a return
    on other people’s capital so I started PropG media.
    If you get real money I mean if you get really lucky and I got really lucky later in life
    in my kind of late 40s I think you do two things. One I think you spend like a fucking
    50s gangster that’s just been diagnosed with ass cancer you spend a shit ton of money and
    then anything above that I think you just give it away.
    Today we’ll answer your questions surrounding the future of Airbnb, microplastics and raising
    American kids in the UK.
    First question.
    Hi Scott. I’m Luke from Manchester in the UK and I’d like to get your thoughts on the
    recent surge in regulations targeting short term rentals like Airbnb in major cities worldwide.
    We’ve seen New York implement restrictions and Barcelona plans to ban short term rentals
    entirely by 2029.
    With housing prices and red skyrocketing in recent years, short term rentals are often
    blamed as a major contributing factor.
    Platforms like Airbnb have become easy targets for politicians and residents despite data
    suggesting their impact is minimal.
    For instance in New York where laws have been passed to limit Airbnb listings we’ve seen
    little effect on rent prices but a noticeable increase in hotel rates.
    It seems politicians find it easier to scapegoat Airbnb rather than addressing their own policy
    failings.
    But looking ahead, what do you think the future holds for Airbnb?
    Does this wave of regulation pose a significant risk to their business model and should investors
    be concerned?
    Thanks Scott for everything you do. Keep up the great work.
    A thoughtful question. First up disclosure. I’m a shareholder in Airbnb. It’s been my
    largest position for a long time. I’ve sold it down a bit but it’s still a big position
    for me.
    I think the world of Brian Chesky, I think the company is the strongest brand arguably
    in the history of travel, has network effects, something like two thirds or 80% of their traffic
    is direct to site which means they don’t have to pay these onerous margins to travel sites
    or Google who then, if you’re the Four Seasons you get some traffic to your site but you
    get booked a lot through third party providers whether it’s an Expedia which does a great
    job but these companies command a lot of margin. They’ll take a lot of margin on the fact that
    Airbnb gets a ton of direct consumer traffic means they have better margins, they have
    more hotel rooms and I think the three biggest hotel companies combined and it’s just an
    extraordinary company, et cetera, et cetera.
    With respect to its impact on housing stock and what is a real crisis in terms of affordability,
    I do think they’ve been scapegoated a bit and that is if you want to talk about the
    crisis of affordability not only in rentals but in housing, it’s pretty simple. We need
    some sort of federal legislation or funding that encourages just more housing permits
    and more construction because it has become so difficult to build housing in the US that
    there’s just a supply-demand imbalance. We need, I think, another million to a million
    to have units constructed every year just to keep up with household formation and when
    you don’t have the supply, demand and prices accelerate faster than inflation and I think
    what you’ve seen with a combination of housing that’s gone from $290,000 to $410,000 since
    the beginning of the pandemic from 2019 to 2023 and you’ve seen those rates go from 3%
    to 7%, that takes the average mortgage rate from $1,100 to $2,300 meaning that it’s no
    longer 2/3 of Americans that can afford a home but 1/3. What’s the result? A lot of
    young people I think have just given up on buying a home and they’re spending more money.
    They’re just saying fuck it. Let’s get an Airbnb in Bangkok or let’s go to London and
    see Taylor Swift. I think that’s bad. One, the thing I love about housing on a risk-adjusted
    basis, it’s not a much better investment than other asset classes but what people don’t
    take into account is it’s forced savings because people have a tendency to make that mortgage
    payment. There’s a lot of older Americans with a majority of their net worth and the
    retirement is in their house. My mom moved to Westwood in 1972. When did we move there?
    Bought a condo for $72,000. Actually, her boyfriend bought it for us. He had another
    family. Life is complicated. Anyways, we bought our condo or Terry bought us our condo for
    $72,000 and then when my mom got sick with cancer for the second time, I said you need
    to move and retire and her ability to do that was once she had a son who was starting to
    do okay economically and could help but also she had a home that had gone from $72,000
    in value to $350,000 because it’s a forced savings plan over 25 or 30 years. Housing
    stock is incredibly important in terms of affordability, not only economically but psychologically.
    It’s yet another reason why young people aren’t mating. Why? Because practice mating
    or commitment is not only having kids, it’s not only getting married but it’s deciding
    to partner on real estate and play house together. The first thing I did, not the first thing,
    I did a lot of things before that but one of the things I did in my kind of evolution
    towards monogamy was buying a house with a partner and starting to build a house and
    think about building a future together and having a second bedroom and know what’s going
    to go in there, something that’s small and looks, smells and feels like. I think housing
    is just such an important role economically and psychologically and emotionally in people’s
    lives. What you’ve had is the acceleration has been a function, I think just of supply
    and demand and this rejectionist, exclusionary, bullshit culture we have where once we have
    a degree or a house, we want to make it more difficult for other people to get a house so
    we show up at the local review board and make it much more difficult for housing permits
    to be issued. That shit needs to stop. If it’s regulation or subsidies, we just need
    more housing built. In terms of Airbnb specifically, there’s just no doubt about it. In certain
    areas, some of the rental stock has taken out of the market. I knew a woman who had eight
    Airbnb, she would rent apartments, she was very savvy, fix them up and then turn them
    all into Airbnb. So to think that that loss and rental stock did not impact the markets
    would be naive. Having said that, what we have is a transfer of economic opportunity
    and that is there is price hikes among renters. There’s a loss of economic value there, their
    prices go up, but the prices go down for travelers or for short-term renters. Why? Because instead
    of having to check into a bad day’s end for $289 a night, they can get a cool little studio
    for 120 bucks in SoHo or in the East Village. So it’s a transfer of wealth and opportunity
    from renters to travelers and short-term renters. Now, how do you solve this externality? I
    think it’s pretty simple and I think Airbnb has been pretty savvy here and that is hotels
    pay taxes. They pay extraordinary actually. If you look at your hotel bill, unfortunately
    it gets jacked up because there are typically city and residence or hotel taxes that are
    pretty serious. Now, if you wanted to make a real dent and Airbnb now pays those taxes
    is my understanding. And what would you do with that additional tax revenue? Boom, you
    figure out regulation or just general subsidies to increase the housing stock. But to lay
    the increase in rental prices at the feet of Airbnb, you’re right, is a little bit
    of scapegoating. It’s an issue. It is dust has caused a transfer and prosperity and economics.
    I do think we need something to address it, but this is just a symptom of a much larger
    problem. And that is we need a drastic increase in incentives and regulation to ensure that
    there’s more housing stock. We have seen the quality of life go down for young people relative
    to their peers. And for the boomers out there saying, yeah, but they still live an extraordinary
    life with their Netflix and their Nespresso and their Coachella. Yeah, but that’s not
    the way life works. They look up and they see people doing better than them. And for the
    first time in our nation’s history, a 30 year old is no longer doing as well economically
    as his or her parents were at the age of 30. And that shit needs to stop. Thanks for the
    question.
    Question number two.
    Hi, Professor Galloway. I’m an MBA from class of 19. We briefly met in 17 at one of your
    books findings. I’ve been a follower ever since. I’m curious if you’ve read up on the recent
    headlines around microplastics and phthalates. In May, the news seemed to hit a new degree
    of virality when microplastics were discovered in testicles. I guess it took that to gain
    more attention. But for many years now, studies have been coming out around the negative effects
    of microplastics that manufacturers and companies knowingly are putting in the products from
    baby bottles to what we consume as adults every day. It feels like companies have failed
    us along with governing institutions. So I have a question for you. How do you think
    as consumers we can ensure the safety of what we buy and consume in the wake of this government
    and action and corporate complacency?
    So let me get this. I’ve got plastic in my testicles. I mean, this question wins for
    the question I know the least about. Look, one thing I’ve noticed about London is that
    everything rots. You buy orange juice, you buy cheese, you buy salami. And three days
    later, it goes bad. And at first that kind of bothered me. And I thought, wait, that’s
    a good thing because there’s something like 110 or 1200 preservatives and chemicals and
    pesticides that the government of the UK or whatever the health ministry is there, the
    equivalent of the FDA said, no, not here, girlfriend, this shit’s bad for you. And I like that.
    When granted, it probably adds expense. And it’s easy for me to say because I can afford
    these foods. But I do think that probably the only way around this is if in fact you
    can impose or show peer-reviewed research that having plastic in your testicles is bad
    and we can solve this problem through regulation. I think recycling is nothing but a misdirect
    to convince us that we have some power over something. I think it was like calling people
    alcoholics. It’s a disease and those people have a problem. So go ahead and drink. Well,
    actually, the majority of us are not alcoholics, but the majority of us would benefit from
    drinking less alcohol. So it’s a misdirect to create a segment of people that we think
    are the problem and are weak and you’re not them, just as recycling in my view as a misdirect.
    The majority of the research shows it’s nothing but a chance to virtue signal and feel better
    about ourselves. And if that sounds harsh, okay, I think we need loss. I don’t understand
    why we wouldn’t have a fairly substantial tax on any plastic and then take that money
    and invested it either in figuring what you do with these plastics and the honest answers
    I don’t know. I keep seeing all these new technologies of ships trying to pull all the
    plastic garbage out of the ocean. And I don’t, I think it’s a losing battle, but there’s
    got to be more environmentally sustainable packaging. I can’t, it’s funny as you get
    older, the things you notice, I got, I forget what I got. I got a gift from somebody and
    I opened, and there was so much shit in packaging. And I thought, Jesus Christ, all this for
    whatever it was, I think it was a small fragrance, you know, Ude Musk, Ude Dog. That’s right.
    The new fragrance from hell not to propagate. Anyways, I think it’s just got to come from
    regulation and peer reviewed research showing how harmful plastic is and the notion that’s
    showing up everywhere. But this is, it has to be a law. I don’t think it’s a consumer
    led revolution. I think these people are very savvy at creating Mr. XC above recycling
    and alcoholics, so to speak. I think it has to come from laws. We have one quick break
    before our final question. Stay with us.
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    time. Get $1,000 off Vanta when you go to Vanta.com/ProptG. That’s Vanta.com/ProptG
    for $1,000 off. Welcome back, question number three.
    Hey, PropG. This is Tom A.D. calling in from London. My wife and I are both American, but
    I’m starting a business in the UK, so the plan is to be here for the foreseeable future
    and raise kids. My question is, as a parent, what’s your advice on raising American kids
    in the UK? Do you feel like they’re missing anything, not being in America or do you feel
    like they’ll be culturally confused at all? I’m worried that my kids might have a weird
    kind of identity crisis, if you will. Thanks for everything that you do.
    First off, I think it’s great. And if you’re moving to the UK and starting a business in
    the UK, that means, A, you’re already economically successful or you’re very confident and a
    risk taker and economically viable. So, if you’re in a loving, supportive relationship
    and have the confidence and the wherewithal to move to England with your kids, it means
    you’re in a really good spot. And my thinking is in the rationalization for moving to the
    UK was that what could we give our kids that would be amazing? And the idea of letting
    them live in a foreign country for several years and experience a different culture,
    I wish my parents could have done that for me. I think it’s just an extraordinary gift
    what you’re doing for your children and they’re going to appreciate it the rest of their lives.
    And you might decide, I couldn’t do better than my life in America. I didn’t want to
    do better. We just wanted to do different and eventually we’ll move back. With respect
    to kids, it’s been just a surprise to the upside. The schools, granted, I send my kids
    to the American school in London and my oldest goes to boarding school at Wellington, his
    home on the weekends, but he boards during the week, both outstanding schools. Also,
    the public schools that my friends send their kids to are really happy. Granted, we live
    in London where those schools are probably well funded, although I don’t know how finance
    works in public schools. But my 13 year old takes the tube to and from school. We just
    love that. Fairly independent here. I think there’s just no way to go around. In terms
    of the identity stuff, I just wouldn’t worry about that. We’ve gotten really into Premier
    League football. My kids still feel very strongly American. We spent a lot of time in America,
    but like Britain is a wonderful democracy. We are allies. It’s probably our closest
    ally, maybe Canada. I don’t know. I think that I think the bond between Britain and the
    US is so strong that it won’t, it won’t in any way give them an identity crisis. It’ll
    enhance their identity and make it a little bit more nuanced and a little bit more interesting.
    I think you’re absolutely going to love it here. I think your kids are going to thrive.
    We have loved moving to the UK. The weather not so much. The weather not so much. So their
    father is constantly depressed and in a bitch of a mood from November to May where this
    round thing goes behind the cloud, but Premier League football is awesome and the schools
    are great. And what a wonderful place to be in that you and your wife have the opportunity
    to bring your kids to a different culture, a wonderful culture for a few years. And some,
    it’s just really good to be you, boss, and it’s good to be your children. This is a wonderful
    gift for them. That’s all for this episode. If you’d like to submit a question, please
    email a voice recording to officehours@prophgmedia.com. Again, that’s officehours@prophgmedia.com.
    This episode was produced by Caroline Shagren, Jennifer Sanchez is our associate producer,
    and Drew Burroughs is our technical director. Thank you for listening to the PropG pod from
    the Vox Media Podcast Network. We will catch you on Saturday for No Mercy, No Malice as
    read by George Hawn. And please follow our PropG Markets pod wherever you get your pods
    for new episodes every Monday and Thursday. The PropG Markets pod was number one in business.
    I think it’s one of the best or most successful new pods in a while. We’re really excited
    about it with my co-host, Ed Elson, the 14-year-old Irish person. Not sure he’s 26 and he’s British.
    But anyways, please tune in to PropG Markets wherever you get your pods every Monday and
    Thursday. By the way, if I have plastic in my testicles, I’m pretty sure it’s one of
    those Evian bottles that you carry around after you’ve actually, oh, there’s my family
    speaking of plastic in my testicles. Come on in guys, just talking about waste and how
    it’s impacting my twins.

    Scott speaks about Airbnb’s role – if any – in the crisis of housing affordability and what its future looks like amid increasing regulations. He then discusses the danger of microplastics and wraps up with advice on raising American children in the UK. 

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  • Prof G Markets: Nike’s Dramatic Downfall & Britain’s Road to Economic Recovery

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    Prof G Markets: Nike’s Dramatic Downfall & Britain’s Road to Economic Recovery
    AI transcript
    Support for PropG comes from Slack.
    When you’re growing a business,
    you can’t afford to slow down.
    If anything, you could probably use
    a few more hours in the day.
    Now, that’s why the most successful growing businesses
    get work done in Slack.
    Slack brings all your people, projects, apps,
    and information together in one AI-powered platform
    built for productivity.
    Start a huddle to talk things out instantly
    and ditch cumbersome calendar invites,
    or use canvases to collect meeting notes,
    goals, checklists, and more,
    keeping everyone on the same page.
    Literally, grow your business in Slack.
    Visit slack.com/prof-g to get started.
    – Hi, PropG listeners, Ed Elson here.
    Apologies for the interruption,
    but I have an important message.
    If you’re hearing this, you are in the wrong place.
    Go listen to this episode on PropG Markets.
    It’s linked in the episode description,
    or you can just type it in, PropG Markets.
    That’s where you’ll find me and Scott
    twice a week, every week.
    Soon, you won’t find us here at all.
    We’ll be leaving the PropG pod altogether,
    so don’t miss out.
    Go listen and follow us at PropG Markets,
    wherever you get your podcasts.
    – Today’s number 85.
    That’s the percentage increase in sales
    of adult fantasy novels in the first half of 2024.
    Ed, I took my cousin to see a sci-fi fantasy movie
    the other day, but the sex was way too graphic.
    Everyone in the theater asked us to stop.
    (upbeat music)
    (singing in foreign language)
    – You saw that coming, didn’t you?
    – Yeah, I’m sort of used to it.
    – Welcome to PropG Markets.
    Today, we’re discussing the fall of Nike
    and Britain’s economic future, but first, first,
    by the way, we just did two jokes
    and they were so profane and inappropriate and not funny.
    The word is cringe.
    – That’s the synergy right there.
    – There we go.
    But first, speaking of cringe, here with the news,
    here with the news is PropG analyst Ed Elson.
    Ed, what is the good word?
    – I’ve got three words for you.
    It’s coming home.
    It’s all I have to say to start this episode.
    – I’m literally beside myself.
    Well, I was in a beer garden last night.
    I was an American living in London in Munich,
    watching Team England play the Netherlands
    in a beer garden and I thought life is so rich.
    – Epic.
    Were you with your kid?
    – Of course, yeah.
    And we went and got a kid today.
    And by the way, we went and bought him
    these new Jude Bellingham cleats at the Adidas store,
    the Adidas store or the Byron Munich store.
    And yeah, so we’re just thrilled to be here.
    What’s your prediction?
    – This is gonna come out the day after the final,
    so I’m gonna get proven wrong maybe,
    but I don’t know, I’m gonna say a two nil to England,
    my prediction.
    – Spain look pretty damn good.
    – They look good, they look good,
    but I have to have the money on England.
    I mean, what do you think?
    – Oh, Gluck, I got a good, I mean,
    you’re talking to someone who’s ordering,
    paying ridiculous amount of money to, you know,
    England kits shipped to me in Berlin about a Sunday.
    So yeah, I’m even trying to find how I can find someone
    to paint our faces, but–
    – By the way, you mentioned the Munich store.
    Do you still have the shirt that I bought you
    from the Byron Munich store?
    If you, I wanna say a year ago,
    I got you a Byron Munich shirt with Prof G on the back,
    you still have that?
    (crickets chirping)
    – Oh, of course, and I love it.
    (laughing)
    – What?
    You bought me a shirt?
    – No, no, yeah, oh yeah, we love it, we love it.
    (laughing)
    – When we were in Munich a year ago,
    we got you a Byron Munich jersey with Prof G on the back,
    presented it to you on your plane,
    and of course, you don’t remember, but–
    – That was the duchess sentence ever muttered on a podcast.
    We bought you a Byron Munich shirt kit.
    So I have a closet full of kits,
    and it’s one of those things, you know,
    those things are pretty perishable.
    It’s not like I’m headed out for dinner one night
    and I think, oh, I’m gonna wear my Byron Munich kit.
    (laughing)
    – You should have framed it and put it up on the wall.
    This is the momentum of how much your employees love you.
    – These things have a shelf life of like the game,
    the shelf life of the game.
    I always buy it and I take a bunch of pictures
    of the game and the kit,
    and then it doesn’t get a lot of use out of that.
    – Throw it in the bin with your awesome jersey
    and your Spurs jersey and your Chelsea jersey as well.
    – Anyways, enough of this shit, get to the news.
    – Just one note before we move on,
    we’ll be recording an Ask Me Anything episode
    in the coming weeks.
    So if you have a question for me and Scott,
    send us a message to officehours@profgmedia.com,
    or you can tag us on xorthreads@profgpod,
    or if you’re watching on YouTube,
    just drop a comment below.
    Let’s start with our weekly review of market vitals.
    (upbeat music)
    The S&P 500 closed above 5600 for the first time,
    the dollar fell, Bitcoin climbed
    and the yield on tenure treasuries dropped,
    shifting to the headlines.
    OpenAI will no longer have board observers
    after Microsoft relinquished its existing observer role
    and Apple scrapped its plan to take up a similar position.
    Regulators have become increasingly concerned
    about Microsoft’s relationship with OpenAI
    and its dominance in the industry.
    CNN announced it’s cutting 100 jobs
    and launching a new digital subscription product.
    CEO Mark Thompson said CNN is working
    to create a billion dollar digital business
    built mostly through CNN.com.
    venture capital firm Andresan Horowitz
    is collecting thousands of AI chips
    to help secure deals with AI startups.
    The firm has already started giving some startups
    access to those chips in exchange for equity
    and plans to build an arsenal of more than 20,000 GPUs.
    And finally, talks for a server deal
    between Oracle and Elon Musk’s AI startup XAI
    have reportedly come to an end.
    As we covered in a May episode,
    XAI was prepared to pay $10 billion
    to rent AI chips from Oracle,
    but Musk now says XAI will build a system on its own.
    Scott, thoughts?
    – Well, I want you to take a little bit of a victory lap here
    because you first highlighted to me
    how just incestuous and concentrated
    the kind of current incumbent players
    were around dominance around AI.
    So anyways, what are your thoughts
    around the first story?
    – Yeah, well, what I said was that the Microsoft board seat
    on open AI was illegal
    and that there was just no way that this could last.
    And that’s what happened.
    I think we have the clip.
    I guess we might as well play it right now.
    I can name you three illegal board positions in AI right now.
    – Name them you high IQ bitch nominated for best co-host.
    Name them, I’m calling your bluff, name them.
    – Microsoft, Microsoft is on the board of open AI.
    It’s, you know, they say it’s a non-voting board seat,
    but that’s still a board seat.
    And Microsoft is also an investor in Mistral and Inflection,
    which are both AI companies
    that directly compete with open AI.
    All I can think is what’s gonna happen
    when the DOJ launches a full fledged investigation
    into this thing.
    Because I would bet that no AI company is safe.
    – I mean, this was bound to happen sooner or later.
    And you know, if you have that level of influence
    on three major AI startups,
    it’s gonna allow you to manipulate and control
    and tilt the marketplace in your favor.
    So regulators are finally catching on to this
    and Microsoft got scared.
    It’s now sort of jumping ship before it gets punished.
    Here’s the problem though.
    – I would argue that the damage here has already been done.
    And the example I would give is what happened with
    that other up and coming startup, AI startup, Inflection.
    You might remember within weeks
    of when I first made those comments,
    the CEO and founder of Inflection,
    this guy Mustafa Suleyman,
    we learned he was ditching the company.
    And where was he gonna go?
    Microsoft.
    And who else left with him?
    His co-founder, Karen Simone and most of the staff,
    they all work for Microsoft now.
    So think about what that means.
    Open AI’s biggest competitor was somehow convinced
    to just abandon ship and climb aboard
    Open AI’s biggest backer, Microsoft,
    which owns 49% of Open AI’s profits.
    So yes, Microsoft is leaving the board,
    but we should be very clear here.
    Microsoft has already gotten what it wanted.
    It embedded itself in the AI scene.
    It quietly formed all of these strange alliances
    between all these AI startups
    that should have been competing,
    but we didn’t really keep track of it.
    And now the stage is set for Microsoft
    to get exactly what it wanted,
    which is for the golden child, Open AI,
    which it more or less owns,
    to go out and take over the industry.
    And that’s exactly what’s happening.
    So this may look like a win for competition.
    It really isn’t.
    – You were prescient in your comments around this.
    And there’s a few things here.
    One, it reminds me of what I had this fantastic lawyer
    at Envelope, a guy named Josh.
    Oh, I’m blanking on his name now.
    But when there were so many conflicts,
    like Sequoia was on our board
    and they would have a failing portfolio company.
    And then the Sequoia representative would show up
    and say, “I have a great idea.
    “Red Envelope should acquire this company.”
    It’d be so obvious that they wanted us to acquire
    the failed products of Sequoia portfolio companies.
    And then this guy, I think his name was Josh Green,
    he said to me, he said, “Scott, also keep in mind.”
    He’s like, “You gotta be mindful of conflicts,
    “but keep in mind conflict,
    “where the valley is run on conflict.”
    And that is having a board member who has
    vested interest and influence over other companies
    can be really helpful.
    That you want connections, you want,
    he says, “The valley runs on conflict.”
    And the person at the center of what you were just talking
    about, the founder of Inflection was Reid Hoffman,
    or is Reid Hoffman, who is on the board of Microsoft
    who owns and controls OpenAI.
    So it is all sort of a Kentucky wedding, if you will.
    And what’s quite interesting here is that they’ve both said,
    “Oh, just kidding, we don’t wanna be on the board.
    “We don’t need to be on the board.”
    Clearly, either the lobbyists or somebody
    from the FTC and the DOJ, all these guys,
    and said, “Just to be clear, this is not kosher.”
    It’s no accident that they both decided
    they’re not gonna be, quote, unquote,
    in their observer board status at the same time.
    This is the most valuable and the second most valuable
    company in the world sitting on the board.
    This observer board status thing is just fucking ridiculous.
    So just an example, my venture capitalists at L2,
    two of them were on the board,
    really super impressive guys.
    And they kept showing up with their associate
    who had done diligence on the deal for the board meetings.
    And the first time they did not even say anything.
    And the second, I’m like, “Why is he in these board meetings?”
    And they said, “Well, he’s done a lot of the work
    “and it’s really good learning for him.”
    And I’m like, “Well, that’s all fine and good.
    “But I didn’t give you guys three board seats.
    “And what a shocker, every time the two of them
    “said something, he would chime in and agree.”
    And here’s the thing about boards.
    They never come to a vote.
    That scene in succession where they go and vote,
    go board member by board member and vote on the acquisition
    and it ends up being seven to six, that never happens.
    I don’t think I’ve ever seen–
    – What do you mean?
    It’s sort of like everyone has a conversation.
    You come to a decision and you kind of unanimously agree
    on a path forward.
    – You don’t take a vote until it’s unanimous.
    And so you work it out.
    The way you come to an agreement is one
    who owns the most shares.
    That person always has kind of the loudest voice
    ’cause they’re the ones that have put the most money in
    and quite frankly, they’re the ones you might need
    to go back to and ask for more money.
    But the number of voices in the room,
    everyone has an equal voice.
    Voting or non-voting, it doesn’t matter.
    So the fact that they, and not only that,
    if the guy from Apple and the guy from Microsoft both say,
    “We’d rather you not do that.”
    Do you think they’re gonna do it?
    I mean, it’s like, okay, we control Android and iOS.
    We control access to the entire of any company to anyone.
    If they said, you know, and if OpenAI said,
    “We think there’s an unbelievable opportunity
    to do something with Spotify, you know,
    Apple Music as a competitor of Spotify.
    We’d really like to develop music
    and we think the best partner for some sort of AI relationship
    around generating music would be Spotify.
    Do you think the guy from Apple’s gonna go,
    “That’s a great idea.
    You’re about to see an FTC and DOJ investigation
    launched here.”
    Because, and you pointed this out early,
    I didn’t recognize, the most seminal technology
    of the last 20 years, probably since handhelds,
    is more concentrated than any new technology
    in terms of concentration and benefits accruing
    to the incumbents, specifically the most valuable company
    in the world, I think today is at Microsoft,
    and the second most valuable company in the world
    have way too much influence across this emerging technology.
    But the idea that the notion they both got out of dodge
    on the same day means they both heard
    from the same person or people and realized,
    okay, shit’s getting real.
    We need to try and create a misdirect
    and try and take the temperature down.
    It’s not gonna work.
    You’re going to see an FTC or a DOJ investigation here.
    – But also, if you think that by them leaving the board,
    that’s somehow gonna relinquish their influence
    over OpenAI, then you’re not grasping what humans are like.
    I mean, they’re friends now.
    They’re all friends now, and they have gutted all of the,
    all of the companies that were supposed to be competing
    that should have made this a competitive landscape.
    It’s just, it’s one team now.
    So it’s a huge concern.
    We should move on to these other headlines.
    Any thoughts on CNN and this CNN+ 2.0?
    – Well, I think CNN+ I think an original scripted offering
    from CNN is just an outstanding idea.
    For the 1% of people who listen to this podcast
    who don’t know, I had a show on CNN+
    and on a Tuesday night, five or four or five episodes in
    my producer, this guy named Scott.
    – Scott Matthews, I wanna say.
    – Oh, Scott, yeah.
    And either Scott called me or the other producer called me
    and said, “I’ve got great news, Mrs. Tuesday night.
    “I’m in San Diego for a speaking gig.”
    And they said, “We’re the number one most viewed weekly
    “on CNN+.
    “There were daily shows like CNN five things or whatever.
    “And then there were weekly shows.
    “Anderson Cooper on parenting, Jake Tapper’s book club.”
    (laughs)
    I mean, what is Jake Tapper reading this week?
    Oh God, that’s page turn.
    I went, “Game of Thrones, Bridgerton, Euphoria,
    “or what is Jake Tapper reading this week?”
    Let me think.
    That’s a toss-up.
    By the way, I love Jake Tapper.
    I’m serious, I do love the man.
    And so super excited, send out an email to everybody
    where the number one show on CNN.
    Now they didn’t tell us how many people were watching.
    I don’t know if that meant like 85 people were watching.
    – Exactly, that’s the key detail.
    – That was the key question that no one would answer.
    And then I wake up Wednesday morning
    and I check my text messages
    and obviously New York’s three hours ahead.
    And I got a text message from Cara Swishers saying,
    “Are you all right?”
    And I got so panicked because Cara’s pretty measured.
    And I’m like, “Am I all right?
    “What, did something bad happen?”
    And I text her back and I’m like, “Wow, what’s up?
    “What’s wrong?”
    And she sent me the article, “New York Times,
    “CNN+ Being Unplugged.”
    Anyways, it kind of died an unceremonious death.
    My understanding here,
    and I’m not sure how much research you’ve done,
    is that they’re gonna put the wall, the paywall,
    they’re gonna bring it increasingly forward every day.
    And CNN needs to do something.
    Its viewership has declined 15% with people age 25 to 54,
    which is the only people advertisers care about,
    ’cause once you hit my age, you start getting smart
    and stop spending money on stupid shit,
    like clothes and coffee and things like that.
    Total prime time viewers in that demographic
    for May for CNN were 96,000,
    whereas Fox had 199,000.
    So the thing about this,
    Fox is doing double the viewership in that core demo.
    And MSNBC had 110, so MSNBC is now beating CNN.
    So it’s pretty ugly at CNN right now.
    They’re gonna have to figure out something.
    And by the way, no one’s called me Ed.
    No one’s called me.
    – That was gonna be my question.
    Would you say yes?
    I think you will say yes, yeah.
    – A, I don’t think I’m gonna get that call.
    And B, I have firmly decided,
    figured out that I have a face for podcasting.
    – Yeah, you say that, you say that a lot.
    I don’t really believe you.
    I think if Netflix called you up
    and wanted to do some sort of Scott Galloway series
    on the story of Scott Galloway’s life,
    I think you’d probably say yes within three milliseconds.
    – UCLA failed startups and erectile dysfunction.
    There you go.
    Let’s turn it into an original scripted series.
    By the way, do you know there’s a term
    for when you play a recording of yourself
    on your own podcasts as you just did a few minutes ago?
    You know the term for that.
    It’s called megalomania.
    (laughing)
    – I’m learning from the best though.
    – Oh my God, I’ve been infected with that virus for a while.
    I will, when I’m speaking, show a video of me above me.
    And I’m like, watching a video of me on top of me speaking
    is like shavings of shit on a shit salad.
    But anyways, you have gone full, full egomaniac.
    – I love it, I’m loving every minute of it.
    – Anyways, XAI and Oracle,
    ending talks over its $10 billion server deal.
    This is, you wanna talk about confirmation
    that Elon Musk is unreasonable?
    The person who runs Oracle is his mentor.
    Larry Ellison.
    – They are very close.
    So for Larry Ellison to back away from this,
    just says one thing that Musk’s demands,
    he just must be so,
    he must have been so difficult here.
    Do you have any thoughts?
    – Well, this is what he does.
    I mean, if you read Walter Isaacson’s book,
    that’s one of the main conclusions
    is he’s obsessed with rushing these production schedules
    and pushing up timelines.
    And whenever someone says,
    “Hey man, like, you know, we wanna do this too,
    but we just don’t think it’s possible.”
    He erupts, or he fires them,
    or, and crucially, in some cases,
    he says, “Figure it out.”
    And they do, and it works.
    So I’ve always been a little bit ambivalent
    about this management style
    and how unreasonable Elon is,
    because it’s rude, it’s disrespectful,
    and it’s kind of lazy to just say,
    you know, without knowing any of the details
    of the technical details of how to get it done,
    you just say, “Oh, just do it faster.”
    But at the same time, it’s also very effective.
    It’s evident from what he’s done at Tesla and SpaceX.
    So we’ll see if it’s true at XAI as well.
    – We’ll see.
    – Andres and Horowitz buying GPUs to get AI deals.
    I feel like this is an incredibly smart move.
    Your thoughts?
    – So it used to be there were a small number
    of venture capitalists, it was a small industry,
    they made a shit ton of money,
    and then everyone realized technology was the future,
    and there was a lot of money to be made,
    and the amount of capital these guys were able to raise
    went up exponentially,
    and then junior partners would split off
    and start new companies, new venture capitalists,
    and the entire venture capital community.
    And as an asset class, it’s just absolutely exploded
    over the last couple decades.
    And the key now is how do you compete against each other?
    And they compete on brand.
    Andres and Horowitz, Sequoia, General Catalyst,
    they just get more deal flow.
    What they also do is they compete on downstream services
    or what you would call verticalization.
    And that is some of the deeper pocketed VCs now have value
    added services for the portfolio companies.
    So they’ll say we’ll share or rent you a CFO.
    We have very strong contacts with venture debt firms.
    We will help you recruit talent.
    We have a full-time recruiter.
    If you take our money, we have a full-time recruiter
    that will help you build out your team.
    And this is going even more vertical.
    This is saying, hey, cool AI startup.
    You have great IP, you have smart people,
    maybe who knows, maybe you might even have
    quote-unquote product market fit
    with your limited beta testing or whatever.
    But the gating factor here is compute.
    And these tips are expensive and hard to find.
    So we have bought a bunch and you can use our compute
    until you get out of the nest.
    So this is going very vertical.
    I think it’s very smart.
    And all of that, it separates them.
    It basically creates pretty tangible differentiation
    from the other venture capitalists
    who don’t have the money or the vision
    to go ahead and aggregate these GPUs.
    So I think it’s super interesting.
    I honestly think it’s super smart.
    We’ll be right back with a look at Nike.
    Support for PropG comes from Slack.
    When you’re growing a business,
    you can’t afford to slow down.
    If anything, you could probably use
    a few more hours in the day.
    Now that’s why the most successful growing businesses
    get work done in Slack.
    Slack brings all your people, projects,
    apps, and information together
    in one AI-powered platform built for productivity.
    Start a huddle to talk things out instantly
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    We’re back with PropG Markets.
    In a terrible earnings report at the end of June,
    Nike lowered its full-year guidance
    and slashed its sales projections
    for the current quarter by 10%.
    That report sent the stock down 20%
    in a single day, wiping out $28 billion in market value.
    It was the company’s worst day on record,
    but the pain has continued.
    Nike was the biggest loser on the Dow last week
    as it slumped to a new 52-week low.
    And year-to-date, the stock is down more than 30%.
    Scott, Nike’s downfall here has been slow
    and then quite sudden.
    In the past three years, the stock has been cut in half.
    What do you think is happening here to Nike?
    – I have some personal history with Nike
    because Nike was one of our biggest clients at L2.
    And it’s topped about them.
    It’s an outstanding firm.
    It’s got smart management.
    It’s obviously got, arguably,
    Nike is one of probably the 10 strongest brands,
    not only now, but over the last 30 or 40 years.
    They made a very strong transition into going vertical.
    It just has a history of innovation
    and they also got out of the kind of the brand era
    and said, “All right, we need to be direct to consumer.”
    And I have a bias towards them
    because when after Gartner purchased L2,
    and I gave the acquiring firm a list
    of the most talented people in the company
    and within about six months,
    11 of those 12 people had left.
    I mean, three of the most talented people at L2,
    Daniel Bailey, who is probably one of my best students ever,
    Ashley Tolbert, super talented young woman,
    and Maureen Mullen, who in many ways kind of built L2.
    All three of them went to Nike
    and I think worked in the direct to consumer group.
    And so I know that they have extraordinary talent there.
    They have an unbelievable brand.
    They’re saying that they overinvested
    in direct to consumers such that when we came out of COVID,
    they didn’t have the same amount of shelf space.
    I think most of it is that they’re struggling
    with the same headwinds in China
    as like an estate lotter is.
    And also they say that these,
    it’s at the Hoka brand and on running have eaten share.
    These two kind of cool upstarts have gotten huge traffic
    and are now kind of billion dollar plus brands.
    But at the end of the day,
    to have this kind of erosion in market capitalization
    and for the company to be trading what is,
    I think a multiple of 17 versus an average of 28
    over the last five years to have its stock cut in half
    versus a doubling of the S&P of that time.
    I think most likely the CEO’s days are numbered
    because what this looks like is that
    to have this kind of implosion,
    I think their stocks off,
    I forget what their stocks off substantially this year.
    – 30% yesterday.
    – Year-to-day it’s off 30%
    but I think it Audidas is up 20%.
    – That’s right.
    – So it’s not the whole category, right?
    This is specific to Nike.
    So I would bet that, I think it’s John Dono is his name.
    I think he’s on the green mile.
    His background is very interesting.
    He was the CEO of eBay
    and then he was the CEO of Service Now.
    He’s been the chairman of PayPal.
    So he’s kind of this software tech guru.
    And it was, I think people were excited
    but also a little ambivalent
    that Nike would bring him in.
    But I think the thesis there was
    that he would digitize the company.
    He sort of fixed the supply chain.
    You know, he’d do all these things
    to bring the company into the future.
    What looks like has happened is that
    during that process, he has neglected the brand.
    – I think bringing in a tech guy
    to run what is the largest or most,
    you know, arguably one of the most important
    consumer brands ever is probably in this instance,
    just not paying off.
    He’s been there a while.
    He owns this performance now.
    And the performance has been such a disaster
    from a shareholder standpoint.
    You know, he’s gonna have to outline pretty serious,
    a pretty serious change in direction here
    and give investors confidence.
    Or like I said, there’s gonna be a switch at the top.
    This feels to me just like Taylor made
    to make us to switch the CEO.
    ‘Cause this just hasn’t worked.
    With a brand like this, with the human capital,
    I know they have, I remember,
    I think I worked for a woman named Heidi Reusen.
    And she was so talented.
    And I remember when they brought in Donho,
    I remember thinking, the hard thing about sexism
    or anti-Semitism or anyism is it’s subtle.
    No one’s gonna say, no one’s gonna say,
    oh, you know, we’d rather just have
    a white guy running the company.
    But I remember, I met several executives in Nike
    who were women in their fifties.
    So I thought we’re just incredibly impressive.
    So I thought we’re gonna be the next CEO.
    And then boom pops up a white guy from Silicon Valley.
    At the end of the day, the reason the CEO
    can make so much fucking money is he or she,
    the buck stops with them.
    And so he’s, I think, got three months
    to outline a vision.
    And he’s got 12 months to show some traction
    against that vision.
    Otherwise, I think he’s out.
    As a matter of fact, I’ve got the board
    is having several, what I call,
    parking lot conversations.
    And that is, there’s two board meetings typically.
    There’s one that happens during the board meeting.
    And then there’s a second one.
    And the two or three most important people on the board
    kind of get together in the parking lot
    or downstairs or they talk or whatever or they meet up.
    And they’re like, hey, what do you think is going on here?
    Like, do you think Bob is the right guy?
    And then there’s a bunch of kind of one-off calls.
    Once those two or three people come to a consensus decision,
    there’s a few more calls.
    And then in executive session at some point,
    they’ll do a call where they think,
    you know, we have some concerns, what do you think?
    And then they’ll make a decision.
    And then they’ll go about trying to affect the decision.
    But right now, I can’t see any reason
    for why all roads don’t lead to a leadership change.
    ‘Cause it’s nothing obvious to me
    that you could blame this on.
    – Yeah, it’s interesting you say that.
    I don’t think it’s obvious,
    but just at a very simple level, sales growth is declining.
    And they are giving up market share to other companies,
    other brands that we’ve mentioned on Lululemon,
    Aloe, Hoka, these are all great brands
    and the stocks of a lot of these companies
    are way up this year,
    on running is up almost 40% this year.
    I think very simply, it wouldn’t be unreasonable to say
    the Nike brand is just falling out of favor.
    And that’s what they have had to depend on.
    And just as a consumer,
    I don’t know if you’ve been to a Nike store recently,
    it used to be like going to the Apple store
    when I was a kid.
    It was like the coolest experience,
    going to Nike town in London.
    Last time I went into a Nike store, it feels cheap.
    It sort of feels like a,
    English listeners will know this, a JD sports.
    I don’t know what the equivalent would be.
    Almost beginning to feel like a dick sporting goods.
    – Or even worse, big five,
    where I bought my first boogie board in Culver City.
    – It’s becoming big five, sure.
    To me, it feels like this is plain and simple,
    a brand issue.
    So I just want to return to brand again.
    If you were advising Nike today,
    what would you do to sort of revitalize this brand
    that at one point seems to own
    the premium luxury athletic wear market
    and whose market share has just been diluted down
    by these other companies like On Running,
    who are now the sexy sports brands?
    – I don’t think it’s a big bold strategic move here.
    Again, you’re right.
    It’s a brand thing.
    And what you just said about the stores,
    that bubbles up to the CEO.
    This is the, that means the CEO has the wrong guy or gal
    in charge of retail operations.
    And I don’t think there’s what I call
    like an obvious quick fix here.
    I don’t think it’s, you know, fire the agency
    and have a new ad agency.
    I don’t think it’s buy On Running,
    which is now probably too expensive to buy.
    I think this is unfortunately very boring shit
    around supply chain,
    trying to increase the pace of innovation with new products
    to get people excited about the brand again.
    You know, this is just,
    to me, this is just blocking and tackling
    and bringing in a CEO
    who’s gonna make a lot of hard decisions.
    I’d be very interested to know
    what is the employee to revenue headcount?
    You know, is this in fact a company that’s sort of fat?
    But this is the boring stuff of day-to-day operations.
    And what it sounds like is that the CEO has the wrong people
    making the wrong decisions across the strongest brand
    or one of the strongest brands in consumer history.
    But if I’m a shareholder here,
    actually I am a shareholder.
    My 401k, I have Nike and Oracle,
    although it’s not a big position.
    But I’d be pissed off that the three,
    that I just mentioned,
    my three colleagues that went to work for them five years ago,
    I mean, ultimately we were purchased by Gardner
    and it was not a cultural fit,
    but you just have to give it to the management team there.
    And a lot of people left
    and some of our most talented employees went to Nike.
    Gardner’s up 160% and Nike is down 20%.
    So you gotta think there’s a lot of people internally
    who are just saying, okay,
    so my stock options are worthless.
    Everybody, all of my buddies,
    you know, I graduated from whatever,
    University of Oregon and I took a job here
    and I had an offer with Google.
    I had, maybe I’m very talented.
    I had an offer with Salesforce
    or I had a chance to go to work for Adidas or,
    I mean, name the company.
    Those people have made a lot more money
    than people at Nike at the stock is,
    the stock has been cut in half.
    I mean, that’s just,
    that’s just crazy.
    And at the end of the day that the only real litmus test
    or metric that matters for the CEO is the stock price.
    – 17 times EBITDA, EBITDA multiple of 17
    for Adidas that number is 29 for on running it’s 48.
    Nike is almost three times cheaper than on.
    Is it a good time to buy?
    – I think comparing it to on is unfair
    ’cause on is a hot new growth brand.
    And by the way, I’m wearing a pair of ons.
    It’s literally how, you know,
    tell me you’re a douchebag
    without telling me you’re a douchebag.
    Like every VC in the world is wearing on.
    – I haven’t seen you not wear ons for the past two years.
    – Yeah, it’s true.
    I sleep in them.
    I shower in them now.
    I love this brand.
    I absolutely love the brand.
    Anyway, that’s not fair
    ’cause it’s a hot upstart brand that’s growing fast.
    The better comparison is Adidas, which is a 29 times
    and the even better comparison is Nike’s average
    over the last five years has been 27 and now it’s at 17.
    But to your question,
    I don’t like to make stock recommendations.
    I think everyone should invest in ETF or index funds.
    But I think, yeah, the answer is I think Nike is a buy
    because this brand is so strong
    and the depth of human capital there is so deep
    that they can survive headwinds, some exogenous shocks
    and even a bad CEO.
    I think we might look back on this
    and think it was a buying opportunity.
    – Okay, well, Scott, I’m gonna give you your own
    megalomaniac moment.
    Two years ago in October of 2022,
    when Adidas was dealing with this crisis management
    with Kanye West, here’s what you said about Adidas stock.
    – The stock actually even looks cheap.
    And I think that’s kind of a learning here
    is that when you have bad news and you have dislocation,
    you have tumble, no obvious answers, a lot of unknowns.
    That usually spells opportunity.
    And that is, there’s just the perfect storm
    of bad things right now at Adidas.
    There’s loss of this hugely lucrative partnership.
    Their core business is weak.
    So as a result, Adidas market cap sits around 19 billion
    for an iconic century old brand
    that has real aspirational value.
    And it’s probably, it’s maybe a distant number two,
    but it’s a solid number two to Nike.
    Nike on a relative basis is trading at about three X
    the valuation of Adidas.
    So I would argue that the opportunity here
    from an investment standpoint is actually with Adidas.
    – And by the way, the stock has doubled since then.
    So Scott, your reactions to your own prediction.
    – Oh, Ed, I hate it when you do this.
    I just, you know, Ed, I don’t like to draw attention
    to myself and I think it’s just inappropriate
    to talk about your wins.
    – Daddy, but the truth is my nipples are hard.
    My nipples are hard.
    Thank you, Ed.
    Thank you.
    – We’ll be back with a look at the road ahead for the UK.
    (upbeat music)
    Support for PropG comes from Slack.
    When you’re growing a business,
    you can’t afford to slow down.
    If anything, you could probably use
    a few more hours in the day.
    Now that’s why the most successful growing businesses
    get work done in Slack.
    Slack brings all your people, projects, apps
    and information together in one AI powered platform
    built for productivity.
    Start a huddle to talk things out instantly
    and ditch cumbersome calendar invites
    or use canvases to collect meeting notes,
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    – We’re back with PropG Markets.
    In her first speech as Britain’s new Chancellor
    of the Exchequer, Rachel Reeves said
    the country’s labor government has inherited quote,
    the worst set of circumstances since the Second World War.
    She cited new analysis from the Treasury,
    which showed that if the UK economy had grown
    at the average rate of other OECD nations
    in the past 13 years, the economy
    would be 140 billion pounds larger.
    We went over why the UK is struggling
    on our May 27th episode.
    But now the Labour Party needs to get out of this mess
    and Reeves laid out the government’s plan to do that.
    It includes increasing public sector investment
    by five billion pounds a year,
    launching a national wealth fund
    for green sector investment,
    building one and a half million homes
    over the next five years and letting the world know
    that quote, Britain is a place to do business.
    In short, Labour’s economic agenda today
    is growth, growth, growth.
    Scott, do you have any reactions
    to Labour’s first week in charge in the UK
    and the road ahead for the country?
    – Everything here makes a lot of sense to me
    and the thing I found really refreshing
    around these elections was I feel like
    they were trying to govern from the center
    and that is they said no to the far right and the far left.
    And I like this kind of leftward breeze
    that’s coming back from continental Europe.
    France figured out a way to bind together
    to kind of body check or stiff arm, the far right,
    which I thought was very encouraging.
    Although the far left in France is not as crazy
    but they’re still fucking crazy.
    So I like this and I’m rooting for them.
    And I think everything they’ve outlined here
    makes a lot of sense for green sector investments.
    Now people would say
    the government shouldn’t be picking winners.
    I think a better investment would be to come up
    with some sort of tax scheme
    or subsidization of venture capital.
    There’s for every startup in Europe,
    there’s 1 million in venture capital available
    in the US, it’s 5 million.
    So a lot of this is just,
    they need to free up the purse strings
    to encourage more investment in startups.
    I think increased public sector investment makes sense.
    More housing, I think that’s a fantastic idea.
    We definitely need that in the United States
    and the price of housing is outpaced inflation.
    And also just being more kind of open for business
    and trying to encourage foreign investment.
    The only thing I would suggest,
    and I don’t think if it’s possible,
    is what I’m deeming or labeling back sit
    and basically say,
    Brexit was the stupidest fucking thing we’ve done
    and let’s undo it to basically say
    a lot of this stupid shit here
    where we made things more expensive
    that made our own products less appealing
    and made our own economy less productive,
    we’re gonna try and counteract these things.
    But anyways, I’m hopeful, you’re the Brit.
    Do you have any thoughts?
    – Yeah, I think directly speaking,
    the whole labor manifesto makes a lot of sense
    for all of the reasons that you just described
    and I agree with them.
    My concern though is that I looked at the actual numbers
    and the numbers that they are proposing
    for this big national turnaround are shockingly small.
    So I’m just gonna give some examples here.
    They wanna boost public sector investment
    by five billion pounds a year.
    That’s not a lot of money.
    That’s as much as Google spends on CapEx
    in a single quarter.
    And if you look at the Tories proposals,
    what were the Tories proposals to cut spending
    over the next several years,
    this plan would only undo a fifth of those cuts.
    So this is actually a very incremental change
    in public sector investment.
    The other issue that’s happening in the UK right now
    is the NHS, the National Health Service, is in crisis.
    There are 7.6 million people
    on the waiting list right now to get treatment.
    Now, labor has a whole plan.
    They’ve promised two million hospital appointments per year,
    an extra two million per year,
    which again, that’s only a 2% increase from the year before.
    And even if everything goes to plan,
    it’s gonna take five years to clear that wait list.
    You mentioned home building.
    They wanna build one and a half million homes
    over the next five years.
    That’s 300,000 homes a year.
    Back in the ’60s, England was building
    600,000 homes a year.
    Double what their plan is today.
    So these are all directionally the right changes in my view,
    but numerically, they’re so small.
    And it does make me wonder
    if the UK can even bounce back from this
    because it just feels like they don’t have enough money.
    There’s just not enough money in Britain.
    They don’t have the capital or the credit.
    They’re now at 100% debt to GDP
    to dig themselves out of the hole.
    And it does make you think,
    if you’re American, you should feel lucky to be American
    because, yes, America has its problems,
    but at the very least, America has the option
    to spend its way out of those problems.
    And I’m looking at what’s happening in the UK right now
    and these very small incremental changes.
    And I’m wondering if the UK has the option
    to spend its way out as well.
    – You may be right, but it’s definitely classic half,
    glass half empty British thinking.
    – It’s the Southgate analysis.
    – I don’t care when the finals, you suck.
    – Look, the second grade of self-inflicted wound
    in geopolitical history of the last 50 years
    beyond the invasion of Iraq was Brexit.
    And there’s something about the culture there
    that does not inspire a lot of organic value creation.
    Having said that, the quality of the educational institution
    specifically the universities,
    the fact that London is the new luxury item globally.
    What do I mean by that?
    I don’t wanna say I started a trend, I was part of a trend,
    but some of the wealthiest Americans
    with the most opportunity are moving to London.
    – You started it, I’ll give you credit.
    – Yeah, I started it.
    But if you’re opening a business,
    an American business or an Asian business in Europe,
    I think you put your headquarters still in London.
    There’s all this talk about, oh, we’re going to France.
    I have a lot of friends in Britain who do very well
    and all this bullshit of two months ago,
    the non-dom thing, I’m moving back to Hong Kong.
    No, you’re not.
    – So people are saying that and give us a brief explanation
    of what this non-dom thing is.
    – Well, basically, my understanding is the UK
    essentially had a tax status
    where you could be a non-domiciled resident of UK
    and pay taxes from your resident taxable place.
    And now they’re basically saying, sorry,
    if you’re not paying taxes here, you can’t stay here.
    – And there’s this issue where you had all these rich people
    who have houses in the Maldives or wherever
    and they basically weren’t paying taxes in the UK.
    And it was a big problem.
    – I have several friends who do really well
    and pay no tax, right?
    So if you were a resident for whatever,
    for tax purposes out of Hong Kong or Portugal
    and you can live in London,
    you can pay effectively no tax.
    And so this thing came through
    and I heard a lot of people bitching and moaning
    that they were going to leave the UK
    and was going to just ask for a UK.
    But here’s the thing.
    They want, the UK, especially London,
    is one of the world’s great cities.
    And when you get to a certain point of wealth,
    I mean, if we wanted to avoid,
    if you wanted to avoid taxes, if you’re wealthy,
    I could move to Puerto Rico right now
    and basically not pay taxes.
    They have this deal, it’s totally legal, you can go
    and you can pay, I think, two or 3% tax rate,
    it’s two or three or some percent,
    but dramatically decrease your taxes.
    But here’s the thing,
    you got to live in Puerto Rico.
    And supposedly what’s different
    about the Puerto Rican tax evasion
    is that you actually have to live there
    for 183 days a year.
    You have to prove that you’re living there
    for 183 days and supposedly, not supposedly,
    it’s reported several billion
    or hedge funders move there.
    And supposedly almost all of them move back
    and that’s the thing that London has.
    It will always attract a disproportionate amount
    of capital because it’s an outstanding city to live in.
    And I still think it’s the capital of Europe.
    Everyone says eventually, oh, it’s, no, it’s not.
    It’s Berlin or it’s Frankfurt
    or it’s startups are headed to, no, they’re not.
    It’s still, I still think the center of Europe
    is in fact London.
    Your point is an interesting one
    and that is you’re saying the tagline
    for all these initiatives should be the following.
    Think small.
    What you’re saying is it’s just,
    it’s just not that dramatic.
    It’s not that interesting.
    The other signs of life here are Raspberry Pi
    going public there.
    I think Sheehan going public there
    on the LSU is going to be a big deal.
    But the nation with the best players wins
    and I do see a trend towards wealth and human capital
    continuing to aggregate in London.
    You’ve been predicting ever since Sheehan said
    it was probably going to list in London
    and then we had this development
    where Raspberry Pi listed in London.
    You’ve been predicting that we were going to see
    a revival of the stock market in London.
    I want to flag a new report from BlackRock.
    The note said, quote,
    “We are now overweight UK equity market.
    Valuation is attractive.
    It has been the case for a while,
    but now we have a catalyst of potentially perceived
    political stability that could act as a trigger
    for international sentiment to warm up.”
    Is it time to start reinvesting in the UK?
    – So again, if you’re going to do this,
    I would say put it in an index fund.
    But if you look at the multiple on earnings
    for stocks in the FTSE, it looks cheap.
    And the markets are cyclical.
    And just about the time everybody says
    it’s all about America and it’s all about tech
    and just throwing the towel,
    you see other markets outperform.
    And at some point, any market gets so cheap
    that it’s irresistible.
    To me, it looks like the UK has been beaten up
    so badly for so long.
    You’re right, it probably is a decent buying opportunity
    right now.
    – Let’s take a look at the weekend.
    Second quarter earnings season continues with the banks,
    Golden Sachs, Charles Schwab, Bank of America,
    Morgan Stanley and US Bank are all reporting.
    And we’ll also see earnings from Johnson & Johnson,
    Netflix and American Express.
    Do you have any predictions, Scott?
    – I think you’re going to see an activist at Nike.
    It’s just too juicy a target.
    I don’t think, it’s hard to imagine,
    and these are famous last words,
    that this company is going to trade that much lower
    than it’s already gone.
    But the numbers here are just striking.
    I got to think that some of the bigger players
    who have a lot of capital to put to work,
    I have their pencils out and are looking at this thing.
    So my prediction is in the next 90 days,
    you’re going to see an iconic activist firm pop up
    and say, we’re here and we’re concerned.
    We’re here and we’re here to help
    is how they’ll position it.
    – This episode was produced by Claire Miller
    and engineered by Benjamin Spencer.
    Our associate producer is Alison Weiss.
    Our executive producer is Jason Stavins and Catherine Dillon.
    Mia Silverio is our research lead
    and Drew Burroughs is our technical director.
    Thank you for listening to “ProfG Markets”
    from the Vox Media Podcast Network.
    Join us on Thursday for our conversation
    with Kyla Scanlon, only on “ProfG Markets”.
    ♪ Lifetimes ♪
    ♪ To help me ♪
    ♪ In kind reunion ♪
    ♪ As the world turns ♪
    ♪ And the dark flies ♪
    ♪ In love ♪
    – Support for “ProfG” comes from Slack.
    When you’re growing a business,
    you can’t afford to slow down.
    If anything, you could probably use
    a few more hours in the day.
    Now that’s why the most successful growing businesses
    get work done in Slack.
    Slack brings all your people, projects, apps
    and information together in one AI-powered platform
    built for productivity.
    Start a huddle to talk things out instantly
    and ditch cumbersome calendar invites.
    Or use canvases to collect meeting notes,
    goals, checklists and more,
    keeping everyone on the same page.
    Literally, grow your business in Slack.
    Visit slack.com/prof-g to get started.

    Follow Prof G Markets:

    Scott and Ed open the show with a discussion around why Microsoft and Apple have relinquished their board observer seats at OpenAI. Then Scott breaks down Nike’s fall from dominance, shares some insight from when Nike was a client at L2, and considers if the stock is a buy. Finally, Scott and Ed discuss the state of the UK economy post-election and Ed identifies his largest point of concern with the Labour party’s manifesto. 

    Order “The Algebra of Wealth,” out now

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  • No Mercy / No Malice: The Financial Frontier

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    Support for property comes from better help.
    Social media has made it really easy to peer
    into other people’s lives,
    but when you start comparing yourself, that’s a trap.
    Therapy can help you zero in on what you want
    instead of what others have
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    Better Help Online Therapy offers a safe place
    to figure out what’s really important to you.
    It’s entirely online and flexible enough
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    to get matched with a licensed therapist fast.
    Stop comparing and start focusing with better help
    visit betterhelp.com/profg today
    to get 10% off your first month.
    That’s better help H-E-L-P.com/profg.
    – Looking to buy or sell a used vehicle?
    Forget the selection and protection
    of BCAA Auto Marketplace.
    Try some random guy off the internet.
    – Some random guy!
    – Yes, zero security, zero peace of mind.
    – Some random guy, the risk is part of the ride.
    BCAA Auto Marketplace helps you buy and sell vehicles
    just like we help you every day.
    Visit BCAA.com/marketplace and avoid.
    – Some random guy!
    – I’m Scott Galloway and this is No Mercy, No Malice.
    The space race is over.
    However, now we’re fighting over the spoils of space.
    Instead of bragging rights,
    the stakes now are profits and power.
    The financial frontier, as read by George Hahn.
    – When Dr. Doug Ross, George Clooney,
    changes the direction of our world,
    it’s a sign I should return to my knitting
    and discuss business.
    I don’t know if it’s age or common sense,
    but it feels as if this world
    is getting increasingly unstable.
    So let’s take a break and venture to space.
    We won the space race.
    Our Nazi scientists were smarter than their Nazi scientists.
    Getting to the moon first and planting our flag
    was a cosmic branding event, literally and figuratively.
    It wasn’t cheap, between 1960 and 1973,
    NASA spent more than half of its budget,
    about $28 billion, $280 billion adjusted for inflation
    on the project.
    Spending on NASA at the peak of the space race
    accounted for more than 4% of the total US budget.
    The worst branding events for space
    were the Challenger disaster.
    – You saw it just a few moments ago,
    about 45 seconds after liftoff,
    a huge fireball in the sky.
    – We have a report from the flight dynamics officer
    that the vehicle has exploded.
    – And Virgin Galactic.
    – Today, the project was dealt a serious setback.
    When its spaceship too exploded during a test flight,
    over California’s Mojave Desert.
    – Space tourism hasn’t yet transported consumers to space,
    but it did shuttle retail investors’ capital
    to Richard Branson’s cruises and airline,
    and Chamath Palahapitiya’s bank account.
    Today, many believe there’s a space race
    between the US and China.
    While our return trip to the moon has been delayed,
    China successfully retrieved soil from its far side.
    And this new space race has given way
    to space spoils.
    Instead of bragging rights,
    the stakes are profits and power
    here on the moon’s billion year sibling, Earth.
    Businesses are either supply constrained,
    like rare Earth minerals or a 1945 Chateau Mutant,
    or demand constrained, pretty much everything else.
    Space tourism is both, which is why it isn’t a business.
    Jeff Bezos is not my astronaut,
    and Virgin Galactic is, see above, stupid.
    As stupid as space tourism is,
    the space business is rational.
    Valued at $630 billion in 2023,
    the space economy is projected
    to reach $1.8 trillion by 2035.
    But describing space as a business sector
    is similar to using Europe as a descriptor.
    There’s a big difference between Ireland and Greece.
    Satellites are, at this point,
    ground zero of the space economy.
    Your television signal, nearly everything on your phone,
    and anything that relies on GPS all depend on satellites.
    Just as machinery and IP were the source materials
    for the modern economy on Earth,
    satellites will likely be the backbone
    of the space economy.
    What’s driving the growth in satellites?
    One company, Starlink.
    The number of active satellites increases weekly,
    so it’s difficult to get up to the minute data.
    At the end of 2022,
    the Union of Concerned Scientists
    was tracking 6,718 operational satellites.
    Roughly half, 3,394 belonged to the SpaceX subsidiary.
    And more are on the way.
    The FCC approved SpaceX’s bid
    to deploy up to 7,500 satellites for now.
    Starlink has plans to launch 30,000 more.
    The idea of one man controlling
    the world’s high-speed internet access is unsettling.
    Hawaiian Airlines and T-Mobile
    have already partnered with Starlink.
    The Texas firm is on the verge
    of becoming this generation’s ultimate ingredient brand,
    like Intel, Nutrisweet, or NVIDIA.
    The addressable market is cosmic in size.
    Currently, Starlink beans internet access
    to 2.7 million subscribers in 75 countries.
    It has kits for resonances, boats, and RVs.
    Monthly plans range from $120 to $5,000.
    The basic hardware costs between $499 and $2,500.
    There are hundreds of millions of people on earth
    who can afford Starlink,
    and many are already paying for internet service
    that’s tied to their home.
    Starlink has a moat the width of Saturn’s rings,
    see above 51% of satellites.
    Its network already outperforms Huznet and Viasat.
    The reviews are getting better as the network scales.
    The 20th century saw the manufacturing age
    seed ground to the brand and service era.
    This millennium, thus far,
    could best be described as the 10X era,
    where products that leverage digital technologies
    are rendering current offerings defunct.
    Profits and their potential attract more competitors
    to the water’s edge to try to cross the river.
    The water level of Starlink’s moat, however, is rising,
    and there appear to be crocodiles too,
    evidenced by Amazon delaying the launch
    of Kuiper to next year.
    One pillar of the 10X economy is verticalization,
    lowering costs, and SpaceX’s crane kick
    is mundane yet dramatic.
    In 2010, the company drove down launch costs
    with its own Falcon 9 to $2,500 per kilogram,
    and it went further still with the Falcon Heavy in 2018
    to $1,500 per kilogram.
    The requisite expenditure is 30 times lower,
    adjusted for inflation, than NASA’s Space Shuttle in 1981,
    and 11 times less than the average launch costs
    from 1970 to 2010.
    (gentle music)
    In his 27-year career, Nolan Ryan
    threw approximately 250,000 pitches
    in exchange for $25 million,
    costing his various team owners $100 a pitch.
    If the Los Angeles Dodgers started Shohei Otani at Pitcher,
    they’d pay him $23,000 per pitch.
    The Ryan Express was the SpaceX of his era,
    propelling things into the atmosphere for less.
    Fun fact, I named my youngest son after the fastballer.
    Last year, the world launched seven objects per day
    into space, with SpaceX accounting for a staggering 73%
    of the global total.
    Note, the most valuable company in the world, NVIDIA,
    has an 80% share of AI GPUs.
    Does SpaceX have a 73% share of space?
    The remaining 27% of launches are a mix
    of non-SpaceX telecommunications satellites,
    defense, navigation, and scientific research satellites,
    as well as crafts that monitor the weather,
    observe the oceans, and track wildfires.
    Not everything in this miscellaneous category is a business,
    but hauling stuff into space is.
    There’s real competition for reusable rockets.
    The European consortium Arianespace
    is testing its Arian6 rocket
    to reduce its reliance on SpaceX.
    Blue Origin, SpaceX, and ULA,
    a joint venture between Lockheed Martin and Boeing,
    each garnered a piece of a Pentagon contract
    worth $5.6 billion.
    The startup Relativity is developing a way
    to use 3D printing to speed manufacturing.
    Stoke, another startup focused on building clean,
    fueled, rapidly reusable rockets,
    raised $100 million at the end of last year.
    Then there’s Rocket Lab’s Electron Rocket,
    which recently celebrated its 50th launch
    after seven years and one month in service,
    a record for a commercial launch vehicle.
    There’s also a related business
    in de-orbiting old satellites and space stations.
    NASA just awarded SpaceX an $843 million contract
    to safely de-orbit the International Space Station in 2030.
    There may even be a business in removing
    the 170 million pieces of space junk.
    That number will only grow
    as we continue to commercialize space.
    The FTC has already issued its first fine for space junk.
    By treaty, nobody owns space,
    and the moon belongs to everyone.
    That’s a problem.
    Geopolitical competition, a growing private space economy,
    and the relative absence of rules
    make space the new Wild West, North, East, and South.
    Low Earth orbit, where Starlink is scaling its network,
    is congested and getting worse.
    Even a small object can do a lot of damage
    if it hits a satellite or space station.
    We’ve already had some near misses.
    A SpaceX satellite almost hit a manned Chinese space station.
    A Russian anti-satellite test sent debris hurtling
    toward the International Space Station,
    forcing astronauts on board to take shelter.
    This is the plot line of the movie Gravity,
    which starred Sandra Bullock
    and President Slayer George Clooney.
    What happens when someone takes out a satellite on purpose
    or an adversary puts nukes in orbit?
    When I was a kid, this happened in the James Bond movie
    You Only Live Twice.
    The axiom of all sci-fi
    eventually becoming reality holds.
    We now have a space force,
    though it’s not a budgetary priority
    for the Defense Department.
    The fight over space isn’t limited to geopolitics.
    It’s also about commerce.
    As business booms and resources are unlocked in new regions,
    private companies will enter the fight.
    It’s happened before.
    We call it colonialism.
    At its height, the British East India Company
    had its own 250,000 man army and the right to wage war.
    The corporation ruled India.
    Its competitor, the Dutch East India Company,
    had a charter that empowered it to raise armies,
    build forts, and make treaties.
    Question.
    If someone threatens a Starlink satellite,
    does Elon Musk call the US government to fight his battles?
    Or does he arm his satellites with tiny projectiles
    that can neutralize the threat?
    Follow up.
    If two companies claim the same spot on the moon,
    do they call lawyers?
    Or does someone go all Nolan Ryan
    and throw a moon rocket at a fragile piece of equipment
    and claim the resources for their shareholders?
    My prediction?
    The next battlefield for proxy wars
    between the West and its adversaries will be in space.
    The armies fighting this war
    will be well-paid mercenaries disguised as corporations.
    Two asteroids sped by Earth recently,
    the smaller one passed between us and the moon
    at a distance of about 180,200 miles.
    The moon is 238,900 miles away.
    Practically a near miss for space travel.
    All we could do was watch the rocks zoom by,
    but as the cost of space hauling decreases,
    new business categories will emerge.
    One possible commercial opportunity
    is mining asteroids and the moon.
    This is still a ways off,
    but the spoils could be galactic.
    The industry brings new meaning to the term wildcatting.
    It would be highly speculative
    and driven by the prospect of abundant booty.
    If you can reach it, mine it and bring it back.
    Last year, NASA launched a probe to an asteroid
    that supposedly has a valuation of 10 quintillion dollars.
    Note, that makes no sense
    as any mineable material of that quantity or value
    would result in a crash in value, but I digress.
    If asteroid mining is possible, a big if.
    It could leverage cheaper space hauling costs
    to meet demand on Earth for the critical metals,
    cobalt, iron, nickel, platinum and other goodies,
    used in electronics, electric car batteries
    and solar and wind power.
    Creating energy off planet is another compelling idea.
    Isaac Asimov first wrote about space solar
    in his 1941 short story, Reason.
    But a recent NASA study concluded
    that it is feasible to generate solar energy in space
    and transport it to Earth.
    Last year, Caltech launched a prototype
    that demonstrated the ability
    to wirelessly transmit power in space,
    beaming a tiny amount of detectable power to Earth.
    This year, UK based startup Space Solar
    tested a way to collect solar 24/7.
    On Earth, solar collection is limited to daylight hours.
    Finally, there’s the idea of relocating manufacturing
    and the pollution that comes with it to space.
    Jeff Bezos told CBS This Morning.
    – This sounds fantastical, what I’m about to tell you,
    but it will happen.
    – He’s right, it sounds fantastical.
    But if the choice is between shifting manufacturing
    to space or colonizing Mars,
    let’s hear the pitch for space factories.
    At the height of the space race,
    NASA scientists realized that pens couldn’t function
    in space.
    To boldly write where no man had written before,
    they spent millions developing implements
    that worked in zero gravity.
    Soviet scientists had a simpler, cheaper solution.
    Pencils.
    Actually, the space pen story is a myth.
    Pencils aren’t great in space, they’re flammable,
    the tips break off and drift away in microgravity,
    risking harm to the equipment and astronauts.
    The real story, in 1965, the Fisher Space Pen Company
    patented a pen that could write upside down
    in extreme heat and cold and even underwater.
    They sold pens to the US and Soviet space programs.
    Fisher is still selling pens to this day,
    about a million per year,
    ranging from $5 to $150 a pen.
    Fisher Space Pen found a business in the stars
    by serving a market on Earth.
    Anyone who wants to reap the spoils of space
    will have to do the same thing.
    Space is the collision of the business trends
    that have defined the last century,
    manufacturing, branding, 10X and unexpected externalities.
    On a recent flight from Miami to New York,
    I was able to try Starlink.
    My phone rang was my son FaceTiming me.
    The sound and resolution were flawless.
    During the call, our pilot announced
    that peering out of the left side of the plane,
    you could see a SpaceX launch.
    It was one of those tech aha moments,
    like the first time you called someone from a car,
    bought something from your phone,
    took a picture of a check to deposit it.
    It was also a moment to reflect on the teen depression,
    propaganda from bad actors and coarsening of our discourse
    that technology has washed up on our shores.
    It feels less than bold to posit that
    if we weren’t more thoughtful about the externalities
    of the commercial development of space,
    it won’t be the final frontier, but our last.
    – Life is so rich.
    (gentle music)
    (gentle music)
    (gentle music)
    you

    As read by George Hahn.

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  • Global Elections, Foreign Affairs, and National Security — with Admiral James Stavridis

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    (upbeat music)
    Support for this episode comes from The Current Report.
    From data privacy to the future of TV,
    retail, media, and beyond,
    the world of digital marketing is constantly in flux.
    So how can you keep up?
    Well, The Current Report is there for you.
    Each week, marketing leaders on the cutting edge
    give you the latest insight.
    So if it’s creating a buzz, they’ll be talking about it.
    Subscribe to The Current Report
    wherever you get your podcasts.
    Support for PropG is brought to you by Viori.
    Are you sick and tired of traditional old workout gear?
    Viori wants to provide you with a new perspective
    on performance apparel.
    Everything is designed to work out in,
    but also look and feel great outside the gym as well.
    Viori’s products are incredibly versatile.
    You can wear them running, training, stretching,
    or just lounging around.
    Viori sent me the Elevate Core Shorts and Stratotec tee.
    And I like the way they feel that form-fitting.
    I feel strong in them.
    I feel sleek in them.
    I feel like a jungle cat.
    Viori is an investment in your happiness.
    For our listeners,
    they are offering 20% off your first purchase.
    Get yourself some of the most comfortable
    and versatile clothing on the planet at Viori.com/PropG.
    That’s V-U-O-R-I.com/PropG.
    – Episode 307.
    307 is the area code serving the state of Wyoming.
    In 1907, the first traditional
    metered gasoline-powered taxi cabs
    were introduced in New York City.
    True story.
    When I rolling out of Lotus,
    my favorite night spot in the early odds,
    I was incredibly drunk.
    My taxi cab driver said,
    “You throw up on my seats, it’s a fine.”
    So, I immediately threw up everywhere else.
    What does that make me happy?
    Go, go, go!
    (upbeat music)
    Welcome to the 307th episode of
    the PropG pod in today’s episode.
    We speak with Admiral James Stavridis,
    a retired four-star U.S. naval officer
    and currently partner and vice chairman
    of Global Affairs for the Carlisle Group
    of Global Investment Firm.
    We discussed with the Admiral his thoughts
    on the elections happening all over the world,
    foreign affairs and national security.
    We also get an update on the wars
    in the Middle East and Ukraine.
    I would love to have Admiral Stavridis on the ticket.
    I find he’s just incredibly measured,
    reasonable, thoughtful, relatable.
    He joked to me I could never run for public office
    because I’m five foot, and he said five foot seven.
    I thought when you’re standing on the bridge
    of an aircraft carrier, you’re seven feet tall.
    This is someone who has made a huge difference
    and obviously is able to command respect
    of thousands of people.
    Okay, what’s happening?
    I am in Munich.
    I’m in Munich where I’m taking my son
    to see the semifinals of Spain versus France.
    Gotta go with Spain.
    Gotta go with the Spaniards.
    Hola, Española.
    France wins too much in football.
    So I’m rooting for the Spanish,
    but mostly I’m excited about tomorrow flying to Dortmund
    and saying England beat the Netherlands.
    Go team England.
    And of course, of course I will be in Berlin
    at my favorite Soho house.
    Best gym in Europe in my view.
    And gonna go see the final, which I’m super excited about
    and I’m hoping that it’s team England versus,
    I don’t know, versus someone.
    Anyways, Germany and football.
    What could be better than that?
    Beer, beer.
    They also have that here.
    Yeah, I’m excited to be here.
    Okay, what else is happening?
    So the thing that is dominating the news cycle day after day
    is whether Biden should drop out of the race or continue.
    After July 4th weekend,
    the president sent an open letter to Democrats
    saying that despite all of the speculation
    he is committed to staying in the race to the very end.
    On MSNBC, the president said
    he’s getting so frustrated by the elites.
    What we’ve had here is that wealthy donors
    are reportedly threatening to withhold donations
    until Biden exits the race.
    I think the way I would describe it
    is if you bucket the donors into three buckets,
    the whales, the dolphins and the minnows,
    the small dollar donors.
    I think the big donors,
    although I just spoke with Reid Hoffman
    and he says they’re concerned,
    but I think they’re just sort of at a standstill.
    Whereas the dolphins,
    I would consider myself a dolphin.
    Somebody gives thousands or tens of thousands,
    but not hundreds of thousands or millions.
    There were sort of an open revolt
    that we’re calling very explicitly
    for a change in the ticket.
    And one of the things that frustrates me
    is that the amount of incendiary pushback you get,
    shut the hell up or just focus on Biden.
    We need to unite.
    It’s almost, it feels almost like a,
    we accuse Republicans of being cultish
    when they have this New Jerk reaction
    of being devoted to Donald Trump,
    regardless of the situation
    or how insane his behavior is.
    And I would argue there’s just,
    the cult is just as strong on the far left.
    Where you get this immediate pushback
    of sign up or shut the hell up.
    And the notion that there isn’t enough time,
    which is sort of their go-to.
    And also the only brand positioning right now
    around a path to presidency is I’m not him,
    specifically I, Joe Biden, I’m not him, Trump.
    And I don’t think that’s a compelling value proposition.
    And the notion that we don’t have enough time is just,
    in my opinion, fucking ridiculous.
    Britain had an election start to finish in six weeks.
    France basically turned back the far right
    and changed the entire complexion of the race
    in about seven days.
    By the way, I think that’s gonna be very interesting
    to see what happens ’cause the far left,
    in my opinion, can sometimes be almost as dangerous.
    They’re well-meaning, but they can be bad,
    maybe not as bad as the far right.
    I’m gonna be very curious to see what happens in France
    over the next couple of years.
    Anyways, I think we could turn chicken shit
    into chicken salad here.
    What would you do?
    You’d, the president obviously needs to step down.
    It’s gotta be him.
    There’s no kind of viable way to ask those delegates
    to go somewhere else.
    They’ve already committed to Biden,
    but let’s assume that he decides to drop out of the race
    with enough pressure, enough voices,
    senators, congresspeople, donations come to a halt.
    Finally, his wife says it would not be fair of me,
    my dear Joe, to put you through this
    or to have you go through this.
    And I think a lot of this comes down to scenario planning.
    So let’s talk through the scenarios.
    By the way, scenario planning is not a means
    of trying to predict the future,
    but trying to imagine possible futures
    and then run a strategy or a course of action
    through all of those futures that has the best outcome.
    And there’s some basics here, one, or basic scenarios.
    One, he stays in the race and wins.
    Good for him.
    I think actually that’s the worst possible outcome
    for Joseph Biden.
    As someone who has been very involved in their parents’ life
    as they have gone into their 70s and 80s,
    I think President Biden, based on what I have seen
    in terms of his cognitive decline,
    is gonna have a very difficult four and a half years
    ahead of him, much less trying to experience that decline
    in what is the toughest job in the world.
    I think this would just be a series of small private
    and public humiliations with people hiding him.
    Keep in mind the last three presidents to be reelected,
    Clinton, Bush, and Obama were 52
    when they were reelected on average versus 82.
    The worst thing that could happen to his family
    and reputation for Joe Biden is if he stays in the race
    and he loses, he then becomes this pariah,
    which is the ultimate historic example
    of malignant narcissism that not only heard a woman’s right
    to bodily autonomy, Ruth Bader Ginsburg,
    delayed a lot of judges getting appointed,
    Diane Feinstein, but Joseph Biden becomes
    a malignant narcissist that let us slowly burn
    to fascism when almost anyone else
    probably would have staved off Donald Trump.
    What we aren’t focused on is that Donald Trump
    had an absolutely terrible debate
    and that anybody else with a pulse in my view,
    and I won’t even say with a pulse,
    the Democratic bench is incredibly strong here.
    How do we turn chicken shit into chicken salad?
    You have a eight, six, and then four-member series
    of debates all held the two weeks before the convention.
    You have Julie Louie Dreyfus host the convention.
    It’s a real convention where we nominate
    and select somebody.
    America gets to know just how incredibly strong
    our ballot is and we mature a candidate
    that not only scares the shit out of Biden
    and tears him limb from limb in a debate,
    which any of these would, Whitmer,
    although publicly she said she’s out,
    but can you imagine a nuisance on a debate stage
    with the president?
    Can you imagine the contrast in terms of height, youth, hair,
    how articulate it is, how compassionate it is,
    how many people and how many eye hops across the nation
    when interviewed by Fox, CNN, the BBC, PBS would say,
    “I’m gonna go with that young, good-looking guy, a lot, a lot.”
    We would go from being six points down,
    which by the way is the greatest margin to the upside
    that Trump has ever enjoyed
    since he started running for president in 2015
    to being up probably five or six.
    We would see the greatest swing in presidential politics
    if we matured any one of these candidates
    and even more powerfully, as we sometimes overestimate
    the power of the president, would be the down ballot impact
    because if the nation got a chance to see,
    and they would, this would be the media spectacle
    of the last decade.
    If they got to see how powerful, smart, impressive
    Josh Shapiro is, if they got to see Vice President Harris
    on the debate stage where she shines
    versus what has been a fairly mediocre tenure
    as vice president, if they got to see Raphael Warnock,
    if they got to see, there’s just so many governors,
    there’s so many talented people.
    Let Amy Klobuchar back on stage to talk about Annie Trust.
    These are Pete Buttigieg, I mean, this is an impressive team
    and the team of the best players wins
    and Democrats would win up and down the ballot.
    It would basically be a two week long commercial.
    What do the voters who decide this election have in common?
    They don’t give that much of a fuck about politics.
    So like me in my 20s, oh, it’s the election this week.
    Maybe I should vote.
    And then they just start thinking
    about general perception of these folks.
    Let’s strengthen the perception of the Democratic Party
    from the top of the ticket all the way down
    and have a competition here, not a coronation.
    But I believe if President Biden decides
    to stay in the race, the strategy and the positioning
    of I’m the other guy, which is his primary foot forward
    is gonna not work as someone
    has been branding his entire life.
    I would love to be if I was a mendacious fuck
    and didn’t care about our country
    and had somehow decided to develop a fondness for fascism
    and was advising the Trump administration
    to be pretty easy, to be a three point communications plan.
    One, run a video loop of the zombie apocalypse
    of useful idiots that are elite colleges
    and say, this is what happens when institutions
    become 98% democratic as many of the faculties
    are of these elite institutions.
    Two, run another video loop of what’s happened
    in the downtown metro areas of some of the biggest cities
    on the West coast that are democratically controlled
    and say, this is what happens when Democrats
    get control of the city.
    And finally three, run a series of edited videos
    that basically portray the president as a vegetable.
    And I just think, I think Biden is good a man
    as he is as successful as the presidency
    as he’s had as a better a president as he would be.
    I think it’s gonna get slaughtered
    against the media machine
    and the perception of a more vigorous
    former president Trump.
    I really hope that people who have influence
    over the president sit him down
    and convince him that, look boss,
    you drop out of this race and this is scenario three
    and every room you walk into for the rest of your life,
    you get a standing ovation and you are a top contender
    to be chiseled into the side of Mount Rushmore.
    This is the path to a better America, simply put.
    And that is the president who has done an amazing job
    needs to drop out and we need to mature, battle test
    and rally behind another candidate
    such that America continues to push back
    on the greatest threat to democracy
    and the greatest threat of the 20th century
    and it’s emerging again and it’s a threat
    we thought was going away, but similar to Jason
    with just with a different hockey mask,
    fascism is raring its ugly head
    and we need to push back on it.
    And this is not the guy to do it.
    America has been the front line against fascism.
    We will continue to need to be the front line
    against the gender apartheid that’s taking place globally,
    anti-Semitism, polarization, divisiveness, extremism,
    climate change, an expansionary Russia,
    a China that has its eyes on Taiwan, income inequality.
    And let’s be honest, America is the most impressive country
    in the world.
    We need to mature the most impressive person in the party
    to lead the Democratic party and be the front line.
    And that is not the president.
    That’s the bad news.
    The good news is we have a ton of people
    who could hold that line.
    It is time.
    We need someone else to enter the race.
    President Biden needs to step down.
    We’ll be right back for our conversation
    with Admiral James DeVaritas.
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    because you both know the holidays just beginning.
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    (upbeat music)
    – Welcome back.
    Here’s our conversation with Admiral James DeVaritas,
    a retired four-star US naval officer
    and currently partner and vice chairman
    of Global Affairs for the Carlisle Group,
    a global investment firm.
    Admiral DeVaritas, where does this podcast find you?
    – I am in the northern part of Florida,
    near Punavidra Beach.
    It’s one of the beach towns for Jacksonville.
    – So I would just love to get your thoughts.
    As someone whose name was constantly floated
    as a potential vice presidential candidate
    for Secretary Clinton and other democratic hopefuls,
    give us a sense for what you think is going on here.
    And if you were to attempt to speculate
    what might play out over the next week.
    This is, I don’t know if it’s the strangest political moment
    I’ve ever experienced.
    Maybe I’m just, I’m much more attuned to it now,
    but obviously a tremendous amount of doubt
    around the Biden campaign,
    but their camp says they’re steadfast
    and their commitment to stay in the race,
    but there’s sort of this drip, drip, drip of party elders
    coming out and suggesting that he stepped down.
    Give us a sense of someone who’s been pretty close to this
    and somebody thinks a lot about strategy.
    What do you think is going on here
    that the public does or does not see
    and what do you think plays out?
    – I’ll give you the historical piece.
    And I at least am old enough to remember
    a similarly difficult moment to absorb.
    And that was, of course, Watergate
    and the resignation of a president
    in advance of criminal proceedings
    being brought against him, Richard Nixon.
    That’s a long time ago.
    So yeah, we’re in 50 years of kind of uncharted territory
    by comparison, although we’ve seen now three impeachments,
    one of Clinton and two of Trump.
    So we’re not complete innocence
    in this sort of strange season.
    But here’s where I’m at on this one.
    As I watched that debate, I felt sad for the country.
    The choice we’re being presented is, at this moment,
    a convicted felon with multiple, multiple character flaws
    on full display.
    And on the other side, an individual
    for whom I have a lot of affection, a lot of respect.
    But Father Time appears to me to have caught up with him
    and he is not from all that I can see in a good place
    to be prepared for four more years.
    I think you could have a conversation
    if we were looking at it for a year in advance,
    but four more years when you look at the progression.
    So a bad set of choices in terms of how it plays out,
    I can answer that in three words, I don’t know,
    and nobody does, literally nobody does.
    Not even Joe Biden, in my view, knows
    how this one’s gonna play out.
    So what I think will happen over the next week to 10 days,
    the Democratic Party is gonna have to make a choice
    of either putting itself 100% behind a president
    who seems physically frail and weak
    and hope for the best in the fall,
    or they’re going to have to find a new path.
    And I’ll conclude with this, Professor.
    There is nowhere in the Constitution
    where it says Republican Party, Democratic Party,
    someone said to me the other day,
    oh, they have to go with Biden
    because the Constitution demands,
    neither Constitution nor law govern political parties.
    We’ve had a plethora of political parties in this country
    and they get to make up the rules.
    And so they have every opportunity
    to conduct a mini primary
    or they could pass the baton to Kamala.
    They’ve got a convention coming up.
    I think we are in extremely unpredictable waters.
    – Does the military or the arms, do they have a voice here?
    – No, and you ought to be very glad that they do not.
    Every military member at every grade raises his or her
    right hand and swears an oath as follows.
    I state your name to solemnly swear to support
    and defend the Constitution of the United States
    against all enemies, foreign and domestic.
    That oath is sworn to the Constitution.
    The military will resolutely avoid being embroiled in this
    and that’s the kind of Republic we wanna be.
    – That’s well said.
    There’s a lot that’s uncomfortable about this
    but one of those things is do you see
    our adversaries being more emboldened
    while we’re in a state of chaos?
    Do you think they sense weakness and tumult
    and are more inclined to be more offensive
    or bold in their actions?
    – I do and that is a significant risk
    and you can break it down, frankly,
    into two significant periods of high risk.
    One is from now through the election.
    I think there the risk is going to be a mal actor deciding
    now would be a good time to launch a, for example,
    massive cyber attack against the United States.
    There’s distraction, there might not be
    a resolute response to that.
    It’s a little ambiguous.
    That period between now and the election,
    simply because mal actors, Russia, China, North Korea,
    et cetera will have a tendency to believe
    we’re too distracted to respond.
    That’s one package of time.
    After the elections got, unfortunately,
    I think we’re gonna have this inner regnum
    in which it would seem to me at least a better
    than even chance of one side or the other
    if it’s a close election,
    which it appears it probably will be.
    There’ll be a further series of legal challenges.
    There could be untoward events like January 6th.
    Who knows that second period of time
    until the inauguration of the new president,
    I think is a second and somewhat even more risky period.
    So yes, we need to be leaning forward.
    You asked about the military.
    The military is not looking internally,
    but I assure you the intelligence agencies,
    the Joint Chiefs of Staff, the combatant commanders
    in position in which I served for eight years,
    two different combatant commands,
    they are looking outward to try and see
    any signs of risk directed against the country
    during these very, I think, concerning periods
    from now through the inauguration.
    – Let’s talk about the Middle East.
    On MSNBC, you said that you believe
    there’s a one in three chance at best
    for a ceasefire in Gaza.
    Talk us through how you landed there.
    – Number one, the Israelis feel
    as though they have not yet completely dismantled
    the military capability of Hamas, but they’re close.
    And you hear that even from Prime Minister Netanyahu,
    certainly from the Israeli general staff.
    So I think temporarily speaking,
    the Israelis are closing in on eliminating Hamas.
    And I believe I’ve said this to you before, Scott,
    but the military center of gravity is actually not Hamas.
    The military center of gravity is that tunnel complex.
    400 miles of tunnels, the Israelis are destroying those.
    When those are done, Hamas loses its opportunity
    to train, equip, organize, and launch attacks
    as they did in October.
    So that’s a military equation that is coming to fruition.
    I think that’s pretty close.
    So that gets me to still more combat opportunities
    and actions, but probably the Israelis
    are getting in a position to make an accommodation.
    On the Hamas side, what I see is a lot of pressure.
    It’s been insufficient so far,
    but increasing pressure from both Qatar and from Egypt
    to get to the point of pressuring Hamas to take a deal.
    I feel both sides are kind of closing toward it.
    If you’d asked me three months ago,
    I think I was saying about a one in five chance.
    Now I’m up to about a one in three chance.
    The forces pulling against it are,
    in addition to the two sides we just discussed, Iran.
    Iran would like nothing better than to see Israel
    continue to be targeted as resources drain,
    see this fighting go on in Gaza.
    So Iran is kind of pulling against it,
    but I’ll conclude with this.
    Now the Iranians have had an election,
    elected somebody, I hate to use these two words
    in the same sentence, Iranian moderate,
    but by Iranian standards, a relatively moderate candidate,
    there might be a little loosening of some of those activities.
    So when you put all that together, it’s not a slam dunk,
    but I think it’s getting close to one in three,
    maybe even a little better than that right now.
    – You referenced in one of the strengths of American,
    I agree, is that our good men and women in uniform
    basically say, all right, good or bad decisions,
    it’s the Oval Office’s decision,
    and we respect the command and control structure here.
    I thought it was really unusual or extraordinary
    that the IDF publicly came out and said,
    we need to see an end of the war
    or calling for an end of the war.
    That struck me as if you at some point came out
    and said to Trump or Obama in a conflict,
    it’s time to end this.
    I thought that was pretty bold, your thoughts?
    – Beyond bold, and from a US norm perspective,
    that officer, she or he would have been fired the next day.
    We do not want our admirals and generals,
    no matter how senior, opining publicly
    about what is in essence a political decision.
    Closest I can come to that, by the way,
    would be Douglas MacArthur, five-star general,
    a general of the armies, victor of World War II.
    Now he goes through and is in charge of Japan,
    all going well, he comes back in command
    for the Korean War, and ultimately the president,
    Kerry Truman, had to fire him for his insubordination
    because he advocated ramping up the campaign,
    possibly using nuclear weapons and attacking China.
    We’re not paying the generals to opine about that in public.
    So yes, I was quite surprised, verging on shock.
    And finally, I know the IDF extremely well.
    Spent four years when I was NATO commander,
    my other side hustle was I was in charge
    of US-Israeli military-to-military relations.
    So I was in Israel quite a bit, became very good friends,
    for example, with General Benny Gantz,
    the former head of the IDF,
    General Gabi Ashkenazi, former head of the IDF.
    I can’t imagine either of them, while in uniform,
    opining on that level of political controversy.
    Really shocking.
    Benchmark, the IDF’s capabilities and technology
    and personnel relative to the other fighting forces
    in the Middle East, or even say, for example, Russia.
    – The IDF has advanced technology.
    I’ll give you three very concrete examples.
    One, they reportedly have nuclear weapons.
    Two, the Israelis have among, I’d say, the top four,
    certainly top five cyber capabilities,
    offensive and defensive alike.
    And they have a superb air force that has the ability
    to conduct long range bombing attacks,
    has fairly good refueling,
    although they’re buying additional capability from the US.
    Nobody else in the region remotely
    is at that level with them.
    What they don’t have is massive manpower.
    They’re a nation of about 9 million, about 7 million Jews.
    So it’s a limited manpower pool compared to Iran,
    compared to any other potential opponent in the region.
    They don’t have the big pool of manpower to draw on.
    But if you ask me, which hand of cards would you wanna play?
    You know, as a general or an admiral,
    I’d grab the Israeli military, it’s a jewel.
    – You mentioned the tunnels.
    And it strikes me that every time there’s a major conflict,
    out of it comes not a surprise,
    but a piece of technology that played a bigger role.
    Like we saw tanks in World War I, but my sense is,
    they really had their day when Hitler rolled his tanks
    into Poland and was met with the Polish cavalry.
    And we saw, okay, tanks are better, right?
    And then we saw aircraft and jet engine,
    you know, all sorts of stuff, radar.
    It’s, you said, or there’s two words,
    and you said one of them that struck me
    that we’re gonna hear a lot more about
    in terms of military strategy and technology and machinery.
    One is tunnels and the other is drones.
    I’d love your thoughts on that.
    And if there are others that are coming out of this conflict.
    – Yeah, tunnels actually have been with us
    in warfare for centuries.
    But the degree to which Hamas was able
    to build this underground complex,
    pretty striking given the restrictions on Hamas,
    comparably the North Koreans have a very sophisticated
    underground tunnel connectivity system.
    So yes, tunnels I think are something that is old,
    but is new again.
    Drones, let’s expand that idea.
    Let’s say unmanned.
    So that means everything from satellites in space.
    A satellite is a drone, right?
    It’s an unmanned vehicle, long dwells, surveillance drones,
    command and control drones.
    What you think of as reapers and predators,
    attack drones, carrying missiles, surface drones.
    The Ukrainian Navy is using surface boats,
    drones to strike Russian warships
    and drones go all the way to the bottom of the sea.
    Here’s the third piece of the triad that I would mention.
    It’s artificial intelligence.
    And we’re seeing the edges of that emerging now in Ukraine,
    where AI is being used to direct these drone swarms
    on both sides of that firing line, still very nascent.
    But as I look at the future of warfare,
    it’s unmanned, cyber.
    It is tunnel complexes.
    I’m gonna throw in special forces into that mix.
    And above all, it’s artificial intelligence
    that will knit all of this together.
    – The truce that Biden outlined,
    kind of this five-step truce.
    And it includes rebuilding of Gaza.
    Like, realistically, and I don’t mean to sound like a nihilist
    or a fatalist here, isn’t any truce given the history here
    just kind of ready to be broken again?
    I’m struggling, I recognize that you’re a military man,
    but as someone who’s been considered
    for these diplomatic posts,
    what do you think, is there a sustainable state of being
    there right now, or could there be?
    – One phrase that has always stuck in my mind
    from former chairman of the Joint Chiefs,
    General Pete Pace, was asked a question roughly
    along those lines, and he said,
    “War will continue in the Middle East
    until the people of the Middle East
    learn to love their children more
    than they hate their enemies.”
    That’s a very profound line.
    And it gets to your point that is it possible
    to undo centuries, frankly, millennia of bitterness,
    particularly between these three competing religious groups
    in the Middle East.
    There’s a fabulous book about this
    written probably 20 years ago, it’s a great title,
    The Battle for God, it’s by Karen Armstrong,
    and it’s a book about Judaism, Christianity, and Islam,
    and their seemingly endless ability to find their way
    to war and bitterness and hatred.
    So the short answer to the question is,
    until the people of the Middle East, collectively,
    decide they are going to reject that nihilistic aspects
    of their religious bitterness and disagreements
    and free themselves from the past
    and the bitterness over previous jihads
    and massacres in camps, and there are plenty on all sides.
    Until that happens, I don’t think there’s a quick solution.
    Now, on a more positive note, if there is a path forward,
    I think the table stakes are a reconstruction of Gaza.
    I think table stakes are a Arab security force,
    not an Israeli security force, an Arab security force
    that takes over security for Gaza.
    And third and most difficult for the Israelis to accept
    some kind of a path towards statehood.
    I think if you could get in that zip code,
    then you could build on the existing diplomatic relations
    between Israel and some of its Arab neighbors.
    That’s the point where the Kingdom of Saudi Arabia
    could come in, Scott,
    and bring a lot of resources to bear on this problem.
    All those are possible, but we talked percentages before.
    I think it’s a one in 10 chance
    that we can really resolve this
    with something as simple as a five-step plan.
    (upbeat music)
    We’ll be right back.
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    – Since we last spoke a few months ago,
    the state of play in Ukraine.
    – Yeah, let’s catch up.
    Since you and I spoke last, Russia has been on the front foot,
    making some gains in the northeast of Ukraine,
    putting some pressure on the second largest city, Kharkiv.
    You could kinda see Putin with some air under his wings.
    What has changed, and how often do you get to put these words
    in one sentence, the U.S. Congress did a good job.
    I’ll say him again.
    U.S. Congress did a good job.
    Finally, having exhausted all other possibilities,
    they did a good job in that they provided $60 billion
    in military aid, which matches the roughly $70 billion
    the Europeans have put toward this project.
    So now there’s real combat equipment flowing forward,
    and I feel the momentum is shifting back.
    Bottom line, however, is, as I think I told you,
    probably six months ago.
    Ultimately, I think this will end in a stalemate.
    It’ll end probably roughly where the battle lines
    are now drawn with Putin in control of about 15% of Ukraine.
    Ukrainians will hate that, but the quid pro quo for them
    would be security guarantees,
    a path toward membership in NATO,
    probably in the three year future,
    and a membership in the European Union.
    That’s a complicated problem boiled down to a few sentences,
    but I think that’s how this one ends up,
    and therefore I think we’ll probably see more stalemate,
    a little bit back and forth on these firing lines
    through the fall U.S. election.
    That’ll be the moment for a negotiation.
    – The elections are, there feels like there’s a leftward
    breeze coming out of Europe, which is shocked people.
    And I was reading about the elections in France,
    and many of us were kind of celebrating the notion
    that it was great that they kind of left,
    center left and then the far left got together
    and decided to coordinate to stave off the far right.
    And I think initially there’s a feeling of celebration,
    but when I look at some of the far left policies
    that I think the center left will have to accommodate,
    they’re fiercely anti-NATO is my impression.
    – What do these recent events and elections, new parties,
    what is the impact on NATO as an alliance moving forward?
    – I will come to that essentially tactical question
    in a moment.
    Can we just step back for a moment and celebrate democracy?
    In the last month, over 2 billion people voted in elections
    that from what I can see were free and fair
    and delivered some surprising results.
    900 million people voted in the Indian election,
    and the outcome was kind of a surprise,
    a body check to Mr. Modi.
    Mexico elects the first woman and the first Jew
    in the most Catholic and patriarchal country,
    arguably in the Americas.
    In South Africa, the ruling party gets a very significant
    body check.
    In the European parliament, another 500 million people vote,
    and it’s a, like you said, a little bit of a right wing,
    left wing, kind of hard to read, depends on the country.
    And then you live in London, Scott.
    We see a complete shift in the government there,
    coming from the left.
    And of course, as you allude to the results in France.
    Now you can like it or lump it on a variety
    of those different candidates and outcomes,
    but I say hail to democracy.
    It’s delivering some surprising outcomes
    in some what appear to me to be free and fair elections.
    That’s a good thing in my view,
    especially as we constantly, as we should,
    wring our hands about the authoritarianism in the world.
    Let’s keep democracy in perspective.
    As Churchill said, the worst form of government,
    except for all the others.
    So that’s the strategic chapeau.
    In terms of NATO, it’s a mixture of reactions that I have.
    UK won’t make a bit of difference.
    UK is going to continue to strongly support NATO,
    particularly having walked away from the European Union.
    In France, you’re right to worry
    about the tenancies of the far left.
    Macron, I think, has his strengths and weaknesses,
    don’t we all, but he has come around on NATO.
    And I think he will work with the left
    to at least ensure that Ukraine continues to get support.
    And that’s the main ball right now.
    Germany, I think, is going to continue
    to increase its defense budget.
    Poland is now spending as much on defense
    as the United States on a per capita basis.
    Maybe a little more, believe it or not.
    And there are other examples in the alliance.
    So overall, the elections are gonna cause
    that transatlantic bridge to creak just a little bit.
    But I think as I look at the NATO situation going forward,
    I think the alliance is going to continue
    to be in a pretty strong position.
    And by the way, I’ll ask the follow-on question.
    Well, wait a minute, Admiral,
    what if Donald Trump is elected president?
    Someone who has talked publicly about pulling out a NATO.
    I don’t see it.
    I think Trump, like all of us, has strengths and weaknesses.
    Ultimately, he’s pretty transactional.
    I think if the Europeans continue
    to increase their defense budget
    and their spending goes up,
    Trump would ultimately say,
    “Yeah, that’s pretty good value for the dollar
    for us to stay with NATO.”
    So I think NATO comes out of all of this,
    certainly not blaze of glory,
    but as a pretty solid alliance.
    – So it feels like we’re going back to Ukraine.
    There’s some winners, right?
    I would imagine the industrial military complex
    or weapons producers in the US are winners.
    I also imagine that China is a big winner.
    They’re getting cheaper oil
    and all of a sudden, they become an integral,
    crucial partner for Russia.
    Give us your read on China as it relates
    to the war in Ukraine and what that means
    in terms of everyone’s favorite, you know,
    bogeyman, the possible invasion of Taiwan.
    – Yeah, I’d love to.
    Let me start with a bit of advice for Vladimir Putin.
    And I despise Vladimir Putin.
    You know, you may or may not know,
    I have 50 medals from 29 different countries.
    The foreign decoration I’m proudest of
    is that I’m sanctioned by the Kremlin.
    I’d put that at the top of my medal stack.
    So I despise Vladimir Putin,
    but if I were going to give him advice,
    I would say President Putin,
    be very careful of your relationship with China.
    You are about to become an extremely junior partner
    in that relationship.
    And think of it this way, Scott,
    you’re the economist, you sit in Beijing,
    you look north, what do you see?
    You see Siberia, this vast, empty land space.
    It’s the size of the continental United States.
    Maybe 25 million people live there.
    That’s it.
    That’s Russia to the east of the Euro mountains.
    Here’s what is there.
    Oil, gas, diamonds, rarers,
    arable land, timber, fresh water.
    You get the picture.
    The Chinese look at that like my dog looks
    at a ribeye steak.
    It looks really good.
    Putin is really taking Russia down
    a strategic rabbit hole here.
    In terms of how the war in Ukraine looks from Beijing,
    you know, if I were President Xi,
    I would be scratching my head.
    Just over two years ago at the Olympics,
    President Putin told his best friend forever,
    President Xi, hey, don’t tell anybody,
    but I’m going to invade Ukraine.
    And in five days, I’m going to sweep that country.
    I’m going to grab that little comedian,
    Volodymyr Zelensky, I’m going to throw him
    in a Florida prison, never to be heard from again.
    And then I’m going to have control of Ukraine,
    which is full of all kinds of wonderful natural resources,
    oil and gas in the Black Sea, a huge agrarian factory.
    It’s all going to be mine.
    That’s what Xi heard.
    Here’s what he’s seeing.
    He’s seen two and a half years of the Russian military
    stumbling around incapable of overrunning a nation
    that it should have swept in the first week or two
    before the Western aid got there.
    Now Putin has missed the window to do that.
    So Xi, his first question is, in terms of himself,
    you know, those Russian generals are pretty bad.
    I wonder what my Chinese generals are like.
    He has no idea.
    He hasn’t had a general hear a shot fired in anger,
    not a single Chinese general.
    They haven’t been in a war of any kind
    since a dust up with Vietnam and not in a serious war
    since the Korean War.
    That’s 70 plus years ago.
    So the point is she has a lot of doubt watching that.
    He also has a lot of doubt about sanctions.
    He knows there would be sanctions imposed
    if he attacked Taiwan.
    He’s looking at what’s happening to Russia.
    So that’s, I think, a second warning shot for him.
    And thirdly, if he’s smart,
    he’s looking at how those Ukrainians are fighting like hell.
    You know, I don’t know if the Taiwanese will fight,
    but I’ve been to Taiwan.
    I’ve met Madam Sai, the former president,
    President Lai, the new president.
    I’ve met their national security team.
    I’ve seen their military in training exercises.
    I think they’ll fight.
    I think they’ll fight hard.
    And by the way, that island
    would be a resistance fighter’s dream.
    It’s mountainous, wooded, surrounded by water.
    That’s not an easy nut to crack
    across a hundred miles of very difficult sea.
    So bottom line, I think she is playing this one
    very intelligently.
    He’s getting tons of free oil and gas from Russia.
    He’s insisting they hard pipe it to the east, to him,
    so that can’t be undone.
    He is doing everything possible
    to create that sense of junior partnership
    on the part of Putin.
    I think he’s succeeding at doing that.
    And I think he’s too smart to launch an invasion of Taiwan,
    at least for the foreseeable future.
    – Admiral James Stavridis is a retired four-star
    US naval officer.
    He is currently partner and vice chairman,
    global affairs of the Carlisle Group,
    a global investment firm and his chair
    of the Board of Trustees of the Rockefeller Foundation.
    Admiral Stavridis has published 13 books on leadership,
    The Oceans, Maritime Affairs in Latin America,
    as well as hundreds of articles and leading journals.
    His forthcoming book, The Restless Wave,
    a novel of the United States Navy
    will be published on October 8th.
    He joins us from his home in Florida.
    In terms of economy of words, Admiral,
    I feel as if our listeners get so much insight
    in so little time.
    So thanks for your, thanks for your crisp insights.
    – Thank you, sir.
    I’d love to come back and talk about World War II
    with you when The Restless Wave comes out.
    – I would love that.
    I think I’ll subside a bit.
    I would love that.
    Thank you, Admiral.
    (upbeat music)
    (upbeat music)
    – Audra of Happiness.
    It’s difficult, but you need to train yourself
    to try and see the best in people
    when you don’t know what’s going on.
    I’m getting, I don’t know if the term is paranoid,
    but I’m here in Europe and something I’ve noticed,
    I was in Turkey.
    We were on a boat in Greece,
    and then we disembarked in Bodrum,
    which is a beautiful part of the world,
    and we’d spent time there 10 years ago,
    and we decided to go back.
    Turkey has had, what’s the term?
    I don’t like Turkey’s policies on Israel,
    and I probably would have rethought the trip
    had we had more notice and it didn’t involve
    rearranging the travel plans for other people.
    But the thing I noticed that really bummed me out
    when I was in Bodrum is that it felt like
    there were just no Americans
    and no Western Europeans there.
    And it bummed me out.
    I thought we were just withdrawing from one another,
    that we’re sequestering.
    It seems like we’re turning into Western Europe and the US
    versus everybody else, or is that true?
    That’s probably not true,
    but it does feel like we’re separating.
    And it’s really disappointing.
    And I was thinking about how wonderful my life has been
    as an adult because of commercial jet transportation
    and a fairly neoliberal viewpoint across all nations,
    including Turkey and the Gulf and Asia
    that really welcome people from different cultures
    and appreciate them.
    And we sort of lay down our differences
    and enjoy each other’s food and company.
    And one of the things I love about American universities
    is it brings in people from all over the world.
    I just think you’re less inclined to declare war on a nation
    if a lot of people in that nation have spent a lot of time
    with people from the other nation.
    I think mingling, mixing,
    interracial marriages are really important.
    We are supposed to, we are supposed to mix.
    We are supposed to,
    there was a reason that mutts are healthier and happier.
    We’re not supposed to sequester and fall in love
    and be friends and have political alliances
    only with people like us.
    We benefit from this diversity.
    And I worry that we’re in fact sequestering
    and bifurcating, if you will.
    Anyways, having said that,
    I was at a table today and I’m staying here in Munich
    and there was a table of four or five people next to me,
    four guys.
    And I don’t know if they were speaking Arabic.
    I think they were.
    And they started passing around a phone
    and I didn’t know what was going on.
    And it was clear, it became clear
    they were showing videos of me
    and then all turning around and staring at me.
    And I found it sort of threatening and intimidating.
    And I went to kind of a dark place
    and then I thought about it and I thought,
    they’re probably just a group of guys here like me
    to see the semifinals of Spain and France
    and recognize me from one of my videos
    and we’re talking about it.
    And so when they got up, I said, “Hey guys.”
    And I just tried to be friendly and nice
    and they were friendly and nice back.
    And I use it as a cautionary tale
    that it’s easy to digress as you get older
    into this sort of the walls are closing in on you
    and become less and less comfortable without situations.
    And you have, especially if you struggle a little bit
    with depression or anxiety or anger as I do,
    you have a tendency to make snap judgments
    and think the worst of people.
    And the reality is the vast majority of people out there
    are like you, they’re good people who love their families
    looking for a nice time, good citizens.
    But it was sort of a,
    I don’t wanna call it a cautionary tale,
    but it reminded me that if I wanna be happier
    and I want a better world, I need to assume the best.
    I need to see the world and see people as a glass half full.
    (upbeat music)
    This episode was produced by Caroline Shagren.
    Jennifer Sanchez is our associate producer
    and Jew Burroughs is our technical director.
    Thank you for listening to the Prop G Pod
    from the Vox Media Podcast Network.
    We will catch you on Saturday for “No Mercy, No Malice”
    as read by George Hahn.
    And please follow our Prop G Markets Pod
    wherever you get your pods for new episodes
    every Monday and Thursday.
    The Prop G Markets Pod was number one in business.
    I think it’s one of the best
    or most successful new pods in a while.
    We’re really excited about it.
    With my co-host, Ed Elson,
    the 14 year old Irish person,
    not sure he’s 26 and he’s British.
    But anyways, please tune in to Prop G Markets
    wherever you get your pods every Monday and Thursday.
    Plain strains and automobiles, that’s how we get around.
    But it hasn’t always been the case.
    For agents, humans have been adapting
    and revolutionizing how we travel.
    So what does the future hold?
    That’s what we’re gonna be exploring
    in our new special series on pivot, the future of travel.
    Whether it’s electric powered planes,
    trains that go at hyper speeds or automobiles
    that are full self-driving, someday they will be,
    even though Elon promises them far too early.
    In any case, it’s really important to talk
    about where we’re going
    and what we’re gonna do about climate change
    and a range of things.
    Tune in to the future of travel,
    a pivot special series brought to you by Virgin Atlantic.
    You can find it on the pivot feed
    wherever you get your podcasts.
    [BLANK_AUDIO]

    Admiral James Stavridis, a retired four-star U.S. naval officer, and currently Partner and Vice Chairman of Global Affairs for The Carlyle Group, joins Scott to discuss foreign affairs and the wars in the Middle East and Ukraine. 

    Scott opens with his thoughts on Biden remaining in the race. 

    Algebra of Happiness: be open-minded. 

    Subscribe to No Mercy / No Malice

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  • Why China Dominates the EV Market, How We Operate the Prof G Media Business, and How to “Rich”

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    Support for the show comes from Ferragamo. When a product is made in Italy, chances are
    it’s well crafted and high quality and that’s especially true of Ferragamo footwear. For
    almost a hundred years the name Ferragamo has been synonymous with luxury and all Ferragamo
    products are made sustainably with ethically sourced materials. Ferragamo footwear is
    designed to last so whether you’re hitting the city streets in a pair of classic loafers
    or strolling the park and contemporary moccasins and sneakers, you can do so in chic comfort.
    Discover Ferragamo’s timeless styles with a modern touch at ferragamo.com.
    Plane strains and automobiles, that’s how we get around, but it hasn’t always been
    the case. For agents, humans have been adapting and revolutionizing how we travel. So what
    does the future hold? That’s what we’re going to be exploring in our new special series
    on Pivot, the Future of Travel. Whether it’s electric powered planes, trains that go at
    hyper speeds or automobiles that are full self-driving, someday they will be even though
    Elon promises them far too early. In any case, it’s really important to talk about where
    we’re going and what we’re going to do about climate change and a range of things. Tune
    in to the Future of Travel, a Pivot special series brought to you by Virgin Atlantic.
    You can find it on the Pivot feed wherever you get your podcasts.
    Welcome to the PropG pods office hours. This is the part of the show where we answer your
    questions about business, big tech entrepreneurship and whatever else is on your mind.
    Hey PropG.
    Hey Scott and team.
    Hey Scott.
    Hi PropG.
    Hey PropG.
    Hey PropG.
    Hi Professor G.
    And last week’s office hours, we answer your questions surrounding the defense industry,
    why greatness is in the agency of others and how to act if your partner makes more money
    than you.
    The world is becoming, it feels like increasingly insecure and all of that leads to increased
    military spending. I also think you’re going to see Japan and Germany dramatically increase
    their military spending.
    I’ve always thought my confidence is storytelling, but my superpower is the ability to attract
    and retain talented people who bring scale to what we do here.
    More women are attending college now than met and two-thirds of jobs now require a college
    degree. The highest paying industry generally wants someone with a college degree and you
    do acquire certain skills and contacts and college. So women quite frankly deserve to
    be making more money than men.
    Today we’ll speak about the Chinese EV market and how we run our PropG media business and
    how to rich. So with that, first question.
    Professor Galloway.
    This is Jonathan from Philadelphia, a longtime listener and first-time caller. Thank you
    for all your thoughtful and funny insights in the podcast.
    I recently visited Shanghai, China for the first time in the last 10 years. One thing
    that kind of shocked me is the number of EVs on the road. I see two or three times more
    Tesla’s in Shanghai than in Philadelphia or New York City. Furthermore, there are many
    domestic EV brands that I never heard of. I talk to the drivers and it seems like EVs
    are just much cheaper there. Tesla Model 3 costs maybe $30k and the domestic ones cost
    close to $20k. Combined with the high gas price there, it just makes more sense for
    people to get EVs.
    What are your thoughts on this? Do you think the US will be able to keep the lead in the
    EV market without government help? I know we have tariffs against Chinese cars so we
    probably will not see any of their cars here. But will that also make our market less competitive
    and stagnant?
    Looking forward to your answer. Thank you.
    That’s a really thoughtful question, Jonathan, from Philadelphia. So first off, just some
    data, IEA’s global EV Outlook 2024 report shows that China accounted for 60% of all
    EV sales last year. So let’s be honest, China is dominating EV production. EV growth in
    China is projected to continue with one in three cars on Chinese roads expected to be
    electric by 2030. According to the Center for Strategic and International Studies, China
    invested $231 billion in its EV industry from 2009 to 2023. Data from Counterpoint Research
    reveals that in Q1 of this year, China continued to leak globally in EV sales growing sales
    by 28% year on year, while US sales grew just 2% year on year. Think about that. Our economy
    is growing faster than theirs. They’re supposedly in sort of a low growth part of their history
    with huge unemployment and they’re growing that industry by 28% versus 2% in the US.
    Now, if we branch out a bit, the EU plans to impose tariffs on Chinese EV imports due
    to subsidies while Biden announced a 100% tariff on Chinese EV imports. What about the
    US? Currently, the US is pumping up support for EVs through government regulations, including
    the Inflation Reduction Act, which will offer certain EV car buyers $7,500 credit. For comparison,
    China offered a $4,600 credit per EV purchase in 2023. Why does China have an advantage
    in the EV race? Simply put, the same reason they have an advantage across anything else
    caused the IEA report that we previously referenced estimates that more than 60% of electric cars
    sold in 2023 were already cheaper than their average combustion engine equivalent when
    compared to Europe and the US. As a consequence, Chinese consumers are largely inclined to
    purchase a domestic model, as you mentioned. Where does this go? China, when you’re talking
    about bringing together products and then assembling them and creating a complex supply
    chain that sources materials, brings together competent labor at a reasonable price, no
    one does China like China. I got to think that they’re going to dominate the low and
    mid-range EV market globally unless we put up even more tariffs, which I just think is
    a bad idea, which is nothing but a tax on consumers, especially EVs, young people I
    think need EVs. And the BYD EV, that’s supposedly a pretty good car that could sell for $12,000
    if it didn’t have tariffs on it. I say no tariffs. I say let the Chinese come in and
    compete on EVs. Now, what will probably happen is that the American EV market, specifically
    Tesla will continue to do well while I think its stock is vastly overvalued. I think that’s
    an enduring company because of one thing, and that is America still has the best brands
    in the world. Name a global brand, an aspirational global brand that’s come out of China. I’m
    still waiting. For whatever reason, the American culture, European culture still produces
    the best brands in the world. And when you start paying $40,000, $50,000 for a car, you’re
    not buying steel wrapped around four tires with a battery. You’re buying something that
    says something about you. You want people to know that you’re wealthy and care about
    the environment, which means you should have sex with me. That’s effectively what you’re
    saying when you buy a Tesla, and that’s why so many guys in midlife crises were sort of
    the first owners of Tesla. When you buy the first electric Ferrari, you’re going to say,
    “I have a very small penis and a lot of money.” Anyway, it’s just sort of kidding. But at
    the high end, you have self-expressive benefit aspirational brands, and the reality is the
    US and Europe pretty much have a monopoly on everything from Bottega Veneta to Nike.
    We’re just better at it. But there’s no doubt about it. When it comes to really hardcore
    deep manufacturing, supply chain driven manufacturing, it’s China under seven dwarfs, and that’s
    including in the EV market. Thanks for the question. Question number two.
    Hey, Scott. It’s Ed from Hampshire in the UK. I’ve been following your content since
    the early days of YouTube back in 2017. At that stage, I was leaving the Army, and I
    found the work that you were producing really helpful at educating me on the world of business
    that I was moving into.
    Definitely the question, which is about the prof g show as a business itself. I’d be
    fascinated to understand a bit more about how you operate the business. How do you select
    the content you’re going to be talking about? How do you pick the advertisers that you’re
    going to work with? What role does Vox Media play in things? And why, for instance, have
    you not moved to a freemium model or even a subscription based, given your well-known
    views on the ad, the supported economy? Again, thank you for all of your work. I’m really
    flattered as a Brit that you’ve been willing to endure the mediocre food and even more
    mediocre weather that London has to offer. All the best to you and yours, Ed.
    Thanks so much for the kind words. I disagree. I think actually London has finally world
    class food. I think anytime you have this level or this concentration of wealth, you’re
    going to attract good food. I do agree with you at wherever on the weather. Go team England.
    Let’s start there. Go team England.
    Okay. So, Prop G Media. I sold L2 to Gartner in 2017, and I kind of hit my number and I
    sat down and I was planning to raise a private equity fund. And I thought I’d really like
    to be wealthier, maybe even someday aspire to be a billionaire. And then I thought, why
    the fuck do I want to be or aspire to be a billionaire? It involves another 20, 30 years
    of really hard work putting at risk the capital I have because you have to take tremendous
    risk to have to register that kind of wealth appreciation because I am far from being a
    billionaire. But I was about to just ramp up and get off the hamster wheel long enough
    to take some performing enhancing drugs and get back on the hamster wheel. And I made
    a conscious decision that I was going to slow down. I still have a lot of tread left
    on my tires, but I thought, I want to spend the rest of my life, at least professionally,
    having more of a positive influence on issues I’m really passionate about, or that’s the
    wrong word, that I think I bring some talent to and that I think are overlooked specifically
    struggling young men, teen depression, some of the externalities around big tech. And
    at the same time, I want to make good money. I want to work with a group of people that
    I really enjoy. And I wish I had figured out earlier that my core competence is storytelling.
    So this all sort of bubbled up to media company, but I didn’t want to take outside capital
    because I didn’t want to have the pressure of trying to get a return on other people’s
    capital. So I started PropG Media. PropG Media is a small niche media company. We have several
    lines of business. For me, it begins with writing. That’s home base for me. I think writing
    is really, really hard, but I think it creates a certain halo, a certain heft of intellectual
    rigor and intellectual capital. So for me, it starts with the newsletter we put out every
    Friday, No Mercy, No Mouse, which is free. It goes to half a million people. I think
    of the Fortune 190 of the Fortune 100 have at least 100 subscribers. That is sort of
    a Petri dish for chapters and themes and a narrative arc around the books. I try and
    write a book every 18 months. I make money there. I average between one and a one and
    a half million dollars per book. That is the hardest thing I do writing books. It’s also
    probably the most rewarding. And then that feeds into some very profitable businesses,
    specifically speaking. I do between two and a half and $5 million a year in speaking fees.
    So that’s an incredibly lucrative business. I enjoy it. It is perfect example of greatness
    is in the agency of others. And that is people think that I just get up there and talk for
    an hour. I don’t have a great team of analysts that will assemble 100, 120, 140 slides. We
    spent a ton of time thinking about narrative arc and humor and visuals and had the pace
    and the flow. I see it as almost like a one man, 57 minute Broadway show. And I try to
    bring the level of production value to it because no one’s going to pay that kind of
    money just to show up and talk about how fucking awesome you are, which is what I see the majority
    of speakers doing this day who just left an office or a job in Hollywood or in the corporate
    world and think they can just get up there and tell war stories about how awesome they
    are. And then the core business from a revenue standpoint is the podcast. And I kind of fell
    into this. I have a face for podcasting. I had five TV shows that are all canceled.
    The podcasting just took off. And been doing that about seven years. These podcasts combined
    will produce somewhere between three and a half and five million a year. So call this
    about a $10 million business, 12 or 11 or 12 full time people, three or four contractors.
    That’s exceptionally high revenue per employee for a media company. I purposely want to keep
    it small. I love the people that I work with. It’s a group of kind of island of misfit
    toys of people I’ve worked with in the past. Kind of my rock or my anchor as a woman in
    Katharine Dillon, who I’ve worked with for the better part of 15 years and brings real
    creative depth and really great management skills. So I can just focus on what I’m okay
    at, which is storytelling. And these things are all a flywheel, right? You sell more books.
    You get more speaking gigs, more speaking gigs, more podcast revenue, more podcast revenue,
    or more people listening to the podcast, more newsletter downloads. And so the wheel spins
    if you will. Now Vox is essentially our content and distribution partner. They’re more a distribution
    partner for me because we produce everything at ProfG. There are employees at Pivot that
    produce it, but for the most part, it’s pretty much the ProfG show. We do all the production
    and we throw the podcast over to Vox and then we pay them a fee to sell the ads and work
    on audience development. Although I’ve never quite figured out exactly what that means
    other than we’re supposed to be great at what we do and create word of mouth, but they’re
    a good partner. They have a great ad sales team. The reason why we didn’t go behind a
    wall, and this is a conversation we have seriously about every 24 months, is that money is meaningful
    to me, but it’s not profound. What’s profound for me is I want to have reach and impact
    specifically on young men. I want people to, especially men to feel more in touch with
    their emotions. I want to educate people about business. And to go behind a wall, if you’re
    really successful, you get four to 8% of your listener base to go subscription, meaning
    that I would immediately lose a minimum of 90 to 95% of my reach. Also, I kind of like
    the ads. I don’t mind the host readovers. I meet advertisers. I like them. It doesn’t
    really bother me. And if you want to press skip, you can get through the ads, but this
    is the most fun I have ever had professionally, but it’s a niche media company, the specific
    crowds out the general, and finally figured out a flywheel, and I’m doing something I
    absolutely love and making good money at it. So thanks for the opportunity and the excuse
    to talk about my favorite subject, me. Thanks for the question. We have one quick break
    before our final question. Stay with us.
    Support for the show comes from Mint Mobile. Getting rid of your pricey phone bill could
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    Support for this podcast comes from Grammarly. Your team spends half their time writing and
    not productive writing, annoying writing, clarifying writing, just following up writing.
    And we all know how that happens. One confusing email turns into 12 confused replies and a
    meeting to get a line. That’s where Grammarly comes in. Grammarly is a trusted AI writing
    partner that saves your company from miscommunication and all the wasted time and money that goes
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    writing help is built into your docs, messages, emails, everything. So why not join Grammarly
    to work faster, hit your goals while keeping your data secure? Learn more at Grammarly.com.
    Welcome back. Question number three.
    Hey, Scott. First of all, I love the pod, of course. But more importantly, I love how
    transparent you are about your finances, both practically and let’s say psychologically.
    So here’s the question. How do you rich? And what I mean by that is what would you do if
    you had a sudden influx of wealth or what advice would you give to someone who has a
    sudden influx of wealth? And I want you to break that down based on how old that person
    might be and how much money they might have gotten in that sudden influx. So, you know,
    between someone in their 20s to 30s, someone in their 30s to 40s, someone over 40 or something
    with whether they got $5 million, $10 million, $50 million, $100 million, whatever numbers
    you think are most interesting for how you would break that down with different advice
    for different people, different age groups, different amounts of money. Thank you. Thank
    you. Keep up the fun work.
    It’s a really thoughtful question. I’m not sure I’m going to have time to go through
    all those segments, but let’s assume you’re in your 20s, 30s, or even, so 20s or 30s and
    you come across $5 or $10 million. So for example, one of 10,000 invidio employees that
    have woken up in the last 12 months and realized that a 31-year-old product manager now has
    $13 million in stock. This is an easy one. Maybe you buy a house, maybe you take a nice
    vacation, but for the most part, you immediately take a lot, if not all of that off the table,
    pay your taxes and invest in low-cost index funds such that when you’re my age, you’re
    just done and you can always have that peace of mind.
    Look at your debt. What debt do you have? And I’m not saying eliminate all debt. If you
    have good debt, you have student loan debt at 3% or you were smart enough to get a mortgage
    when rates were really low, so you don’t pay that off. But any debt that is, say, higher
    than 6% or 8% or what you could get in the market, I want you to go and pay off that
    debt. You just don’t want this haunting you and following you around. And then you are
    not going to buy anything. I mean, maybe go out for a nice dinner, maybe take a vacation,
    fine. If you’re going with striking distance of a home and you need that for a down payment,
    okay, but be thoughtful about what is the monthly payment going to be. But what I really
    want you to do with that is I want you to put it into a low-cost index fund because
    even $150,000 to $200,000 if you’re in your 20s or 30s, that is literally, if you’re smart
    enough and disciplined enough to put it away, diversify it in an index or an ETF and never
    look at it again until you are my age, you’re going to be fine. You’re going to really be
    happy that you demonstrated that kind of character and the kind of disciplined maturity
    that I didn’t have.
    If you get real money, I mean, if you get really lucky and I got really lucky later
    in life in my kind of late 40s, say 50, 70, 100 million, I think you do two things. One,
    I think you spend like a fucking 50s gangster that’s just been diagnosed with ASK cancer.
    You spend a shit ton of money. Mostly, I think, and most of the research shows that the greatest
    happiness of return you’re going to get is spending it on experiences. And then anything
    above that, I think you just give it away. I think it’s really important that we maintain
    this wonderful American brand of generosity. Money is a transfer of time and work and there’s
    so many people that would just a little transfer of your time and work to them in the form
    of money. Just make some so much happier. There’s so many wonderful causes that need,
    that can do just incredible good with a little bit of resources. So this is what you call
    a great problem. When you’re younger, put aside capital, stop. Don’t fall into the delusion
    that you making that money meant you’re really talented. Yeah, maybe that means that, but
    more than anything, you’re really talented and really lucky. Take some luck off the table,
    concentrate, put it into low-cost index funds. And if you’re my age and you come with the
    money and you have more money than you need, then brother, spend it all or give it away.
    That’s all for this episode. If you’d like to submit a question, please email a voice
    recording to officehours@propertymedia.com. Again, that’s officehours@propertymedia.com.
    This episode was produced by Caroline Shagren. Jennifer Sanchez is our associate producer
    and Drew Burroughs is our technical director. Thank you for listening to the PropG pod from
    the Vox Media Podcast Network. We will catch you on Saturday for No Mercino Malice, as
    was read by George Hawn. And please follow our PropG Markets pod wherever you get your
    pods for new episodes every Monday and Thursday. The PropG Markets pod is literally number
    one in business right now, so please subscribe. It comes out new episodes every Monday and

    Scott speaks about the Chinese EV market, specifically how China has an advantage in the EV race due to costs. He then discusses Prof G Media’s business model and why he hasn’t moved the show behind a paywall. He wraps up with advice to someone who has suddenly come into a significant amount of wealth. 

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

    Subscribe to No Mercy / No Malice

    Buy “The Algebra of Wealth,” out now.

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  • No Mercy / No Malice: Time to Leave

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    The DQ freezer, home to all the blizzard flavors of the past, is opening to bring back the salted
    caramel truffle blizzard for a limited time. It’s too good to share. Everyone has to get one for
    themselves. Hurry before it’s gone. DQ, happy taste good. Looking to buy or sell a used vehicle?
    Forget the selection and protection of BCAA auto marketplace. Try some random guy off the internet.
    Some random guy. Yes, zero security, zero peace of mind. Some random guy, the risk is part of the ride.
    BCAA auto marketplace helps you buy and sell vehicles just like we help you every day. Visit
    bcaa.com/marketplace and avoid some random guy. I’m Scott Galloway and this is No Mercy, No Malice.
    As read by George Hahn.
    I believe President Biden will announce he is withdrawing from the 2024 race imminently.
    Just as anybody who’s seen a commercial or a logo believes they’re an expert in advertising and
    design, I’ve convinced myself I have insights into the inner workings of the Beltway. I don’t,
    however, I do understand the male ego, family dynamics, and scenario planning.
    The story the Biden camp has been telling is things are better than they feel and Joe is the best
    available option. It’s him or chaos. Any narrative has a life of its own. And last week, the narrative
    rear ended reality so violently that after the airbags deflated, there was a stunned pause that
    crisply turned to panic. And panic was the correct emotion. Laid bare in front of us were our worst
    fears, plus a feeling of embarrassment, having let the media and handlers manipulate us.
    But communication is with the listener. And despite evidence everywhere,
    we Democrats had entered a self-imposed exile from the truth.
    Biden has engaged in fewer media appearances and press conferences than any president
    in recent history. The fewest since Reagan, who at 74, began to show signs of Alzheimer’s.
    The last three presidents to win reelection, Clinton, Bush, Obama, were an average age of 52
    at the beginning of their second terms. Three decades younger than Biden, should he return
    to Pennsylvania Avenue. Democrats in the media wrote indignant open letters to biology regarding
    ageism, biology’s response, “Hold my beer. How could we be this fucking stupid?”
    The narrative now stands at, “I am an old man and worse another malignant narcissist who won’t get
    out of the way.” It’s the political equivalent of turning on the radio and hearing John Legend’s
    all of me again and again and again. The result? In the last week, Trump’s lead among likely voters
    has increased from 3% to 6%. A substantial shift in a race where the majority have already made up
    their minds. Democrats have been saying for years correctly that Trump is not fit to be president.
    “Okay, now do Biden,” said the universe. “Yes, an impaired Biden would still make a better second
    term president, but we’ll probably never know.” The polls say how moderates and young voters
    will opt for criminality over senility. The real tell is how quiet Trump has been about Biden’s
    debate performance. Trump desperately wants Biden to stay in the race. If or when Biden is
    nominated and there is no turning back, the Trump media machine will turn him into a vegetable.
    Ambition is not in itself a bad thing. It’s where innovation, wealth creation, and a lot
    of other good things in life come from. It can turn pathological, though, when it overwhelms our
    feeble ability to make decisions and act in accordance with facts and not emotion.
    Estes Kefauver, a senator best remembered now for his mafia probes, famously quipped,
    quote, “Presidential ambition is a disease which can only be cured by embalming fluid,”
    unquote. Joe Biden has had a bad case for a long time.
    In what it takes, his classic account of the 1988 presidential race, journalist Richard
    Ben Kramer quoted an aide warning a 46-year-old Biden that running meant sacrificing friends,
    family, his entire life, quote, “You’re going to want this worse than anything,
    and it’s going to take over,” unquote. Biden’s answer essentially was, “I’m willing to take that
    gamble.” At a campaign stop in 2020, Biden said, quote, “I view myself as a bridge, not as anything
    else. There’s an entire generation of leaders you saw standing behind me. They are the future
    of this country,” unquote. But since then, he’s convinced himself that he, at age 81,
    is the future. The actuarial charts suggest he doesn’t have much of it, future, left.
    Let’s ignore cognitive decline. Something else makes it even harder to govern. Death.
    According to actuarial tables, there is a greater than one in three chance he’d die in office before
    the end of his second term. Note, it’s not much better for Trump, but cue the indignant denial
    machine. He appears much more robust. Having the grace to leave is a gift, and many otherwise superb
    people don’t have it. Ruth Bader Ginsburg set back women’s rights by her refusal in the face of all
    the medical and political evidence to retire from the Supreme Court when a Democrat could name her
    successor. Despite all the good she did, her ultimate legacy is that she enabled the overturning
    of Roe v. Wade. Likewise, if Biden loses to Trump this November, that is the only thing
    anyone will remember about him. An underrated superpower socially and professionally, and
    something great brands do, is creating a sense of scarcity. The easiest way to achieve this
    is to leave too soon instead of too late. Why do smart people ignore such common-sense advice?
    There is a great deal of research on humans’ capacity for self-deception.
    William S. Burroughs, who divided humanity into hustlers and marks, put it bluntly, quote,
    “Hustlers of the world, there is one mark you cannot beat, the mark inside,” unquote.
    We can’t imagine our own end. Try to picture what it’s like to be dead. You can’t, not really.
    You might think of darkness or sleep, things you’ve actually experienced in this life,
    but your brain has no meaningful point of reference for the real thing.
    As a result, we believe decline and death are things reserved for other people.
    If we are badly designed for the task of conceiving of and accepting our cosmic sell-by dates,
    we’re even less apt to recognize the smaller endings that come along the way.
    Politicians and CEOs are particularly bad at this.
    Washington is a large assisted living community full of rich people who believe the world can’t
    get along without them and will never have to. The result has been a disastrous transfer of
    prosperity from young to old, as old people keep voting themselves more money.
    As I’ve written before, we need more ageism, specifically churn.
    Ranjay Gulati, a professor at Harvard Business School, recently told The New York Times,
    quote, “Most leaders left to their own devices will not recognize the right time to leave.
    It’s really hard to stay grounded and humble when everyone is telling you you’re right.”
    Which brings us back to the possibility that Trump, a genuinely bad person, may be re-elected.
    Biden, a genuinely decent person, has let his ego wager all our futures.
    His willingness to do so reflects a common human failing. That doesn’t make it any
    less wrong or selfish. He and his family have put their own hopes and wishes ahead of the countries.
    However, I believe his catastrophic performance in the debate has catalyzed a conversation
    and a reckoning that will result in the Biden family deciding he should withdraw.
    Why? The dam has broken. Post-debate, the most powerful voices in tech,
    media, Congress, party, i.e. Reed Hoffman, The New York Times, South Carolina Representative James
    Clyburn, Pelosi, Obama have all, as gently as possible, started suggesting he should withdraw.
    Like a teen boy or girl who senses they’re about to be dumped and can’t stop sending text messages,
    the Biden camp has sent me eight emails in the past 24 hours assuring me they’re in it to win it.
    The most fucked up part is the lame attempt by loyalists to shame people online and to
    sticking their heads back up their asses. Take a breath, sit down, 90 minutes shouldn’t define
    a presidency, etc. Seriously. Wake the fuck up. The two most likely candidates to replace Biden
    are Vice President Harris and California Governor Newsom. Nobody else has the name recognition.
    Either would be up substantially in the polls within a week of the baton being passed. Branding
    is about differentiation and the contrast with Trump would be stark. Neither has been
    involved in an insurrection, then found liable for sexual abuse, nor forced one in five women who
    needed to terminate a pregnancy to leave their state. And most distinctly, both were born when
    Trump had already graduated from college and was working for his father. Harris would be the most
    seamless as the quarter of a billion dollars Biden has raised is technically also hers.
    In addition, the nation appears to be finally ready for a woman president and she seems to
    have found her voice since the debate debacle. Finally, though she hasn’t distinguished herself
    as VP, she was a strong AG and senator. This indicates she’s probably better in an executive
    role. Newsom is straight out of central casting, built in a factory with parts from lesser candidates.
    He’s already the president of a nation larger economically than India, France or the UK.
    He’s a great debater. Lastly, he’s hot and people are more likely to vote and canvas
    for a candidate they’d like to have sex with. Newsom is the candidate who scares Trump.
    Scenario planning is not an attempt to predict the future, but to imagine several possible futures
    and determine a course of action that has the best outcomes across several futures.
    And in my view, most or all roads lead to President Biden stepping down.
    The polls suggest that the status quo will lead to a Trump victory.
    The following are three alternate scenarios and speculation on what each would mean for
    the Biden family. One, Biden withdraws. Trump defeated. Biden cements his legacy as one of the
    great presidents and receives a standing ovation upon entering any room. The remainder of his life
    is the mother of all victory laps. He is on the short list when polls are taken about who should
    be added to Mount Rushmore. Two, Biden withdraws. Trump wins. I don’t see this as a realistic
    scenario or more specifically, I don’t want to think about it. These are my scenarios. Regardless,
    if this came to pass, nobody would hold Biden responsible for trying to do the right thing.
    Three, Biden remains and wins. This is the one that makes me believe he will withdraw
    in the coming days. Joseph Biden and his family have experienced staggering loss.
    It’s difficult to know the specific dynamics of a family, but it’s a safe bet his family
    loves him a great deal. The worst outcome for their husband, dad, brother wouldn’t be losing to Trump.
    It would be a second term. His life would become an awkwardly choreographed dance,
    family and aides trying to sequester him from public view. He’d experience an infinite number
    of small private and public humiliations every day as he succumbs to a foe that cannot be defeated,
    see above, biology. Staying in may be what he wants and what the Bidens believe they want,
    but with some distance, his loved ones will recognize that remaining in the race presents
    two outcomes, bad and worse. Seriously, for those of us who’ve cared for a parent in their 80s,
    imagine his life should he win for the next four and a half years.
    I don’t believe his family will let that happen to him. I think love wins here.
    Life is so rich.
    [BLANK_AUDIO]

    As read by George Hahn.

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  • Prof G Markets: How the Debate Moved the Market & Wall Street’s Take on Trump – with Josh Brown

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    When it comes to Smartwater Alkaline 9.5+ pH with antioxidant, there’s nothing to overthink.
    So, while you may be performing mental gymnastics over whether the post-work gym crowd is worth it,
    if you’ll be able to find a spot for your yoga mat, or if that spin instructor will make you late for dinner again,
    don’t overthink how you hydrate. Life’s full of choices. Smartwater Alkaline is a simple one.
    Treats for every celebration, big or small. Make it easy and breezy with our legendary lineup
    of summer must-tries from the PC Insiders Report Summer Edition.
    Like our new flakeouts, there are delicious twists on the croissant donut
    with 24 layers of croissant flakiness twisted with fancy donut fun. Get ready to go all out for less.
    [Music]
    Welcome to ProfG Markets. I’m Ed Elson and I have some good news and I have some bad news.
    The bad news is that we are unfortunately missing Scott this week.
    He’s floating around in Greece on a yacht right now, and I’m very embarrassed to say this on his behalf,
    but he does not have Starlink. I know he’s been talking a lot about that.
    He has standard Wi-Fi on the SuperYacht and apparently it’s not good enough to record a podcast.
    So he’s out of commission, but here’s the good news.
    We have our favorite New Yorker, Stan again, for Scott this week.
    He’s the co-founder and CEO of Ritt Holtz Wealth Management. He’s a regular on CNBC.
    We’re working on that. He’s a sharper, meaner, hungry version of the dog
    and at this point, a great friend of this podcast.
    Ladies and gentlemen, please welcome the one and only, Josh Brown.
    Josh, thank you so much for joining us.
    I’m just going to pause for applause.
    [Applause]
    Hey, I actually got an update on Scott’s Odyssey.
    Oh, you did?
    He has just passed between Cilla and Corebdis.
    Okay.
    The crew has slaughtered the cattle of Helios,
    and shortly they will be arriving at the land of the lotus eaters on route to Calypso’s Island.
    So we’re getting updates sporadically, and I will keep you posted.
    Do you want to deliver a message to Scott who’s going to be listening to this episode
    when he’s probably in Bodrum or I don’t know where else he goes, the Aeolian Islands somewhere?
    I’m going to let my performance on the pod be the message.
    [Laughter]
    Let’s speak for itself. All right, I love it.
    We’re already off to a great start.
    I’m not too worried about this one, so let’s start with the headlines.
    [Music]
    A GameStop shareholder filed a lawsuit against Keith Gill,
    also known as Roaring Kissy for an alleged pump and dump scheme.
    Martin Radev claimed Gill was manipulating the stock for his own gain after Gill’s posts in May
    triggered a 180% rise in GameStop shares.
    However, Radev dropped the suit within days of the filing.
    Warren Buffett has reworked his will to put nearly all of his remaining wealth,
    about $130 billion, in a charitable trust.
    The billionaire said his three children will oversee the trust
    and unanimously decide where to donate the money once he dies.
    And finally, the Supreme Court voted to overturn a 40-year-old decision
    that provided increased regulatory authority to federal agencies.
    A decision known as Chevron deference created a legal precedent
    that courts should defer to federal agencies on how to interpret laws from Congress.
    With the ruling now overturned, federal agencies are likely to face
    increased legal challenges when regulating things such as the environment,
    healthcare, and taxes.
    Let’s start, Josh, with this Roaring Kitty lawsuit,
    which we discussed a little bit when you were on the show last time,
    but there have been more developments.
    One, the lawsuit.
    Two, he also bought a stake in this company, this pet retailer Chewy,
    which caused the stock to rise 20%.
    So this is kind of becoming Keith Gill’s playbook.
    He buys a large stake in a small kind of questionable company.
    He posts about it on Twitter.
    He watches the stock explode.
    And then it’s up to him if he wants to hold or sell any reactions to Roaring Kitty
    and his influence on the markets right now.
    Well, I’m a freedom of speech guy.
    So from my perspective, he’s an investor.
    There is no rule that says he can’t come out and say he bought a stock.
    In fact, I would argue he is more transparent in his transactions
    than most professionals on the street.
    If he were a hedge fund manager, the minimum requirement that he would have to meet
    would be to file within 45 days of the end of the quarter,
    whatever positions he finished the quarter holding,
    which means in real time he would never have to say a word.
    So if anything, he’s been more transparent.
    I think the guy should be able to buy and sell at will.
    And I think if he chooses to reveal his portfolio, there’s nothing wrong with that.
    Where it gets into a gray area is if we think he is deliberately manipulating the stock
    in order to pump and dump on other investors.
    The truth is he’s not selling.
    So to have a pump and dump, there’s got to be a dump, right?
    So I have no problem with what Keith Gill is doing.
    And the last part of this is no one’s putting a gun to anyone’s head
    and forcing them to follow his trades.
    People are doing that of their own volition.
    So I think he should be able to get long, get loud,
    so long as he’s not running a foul of manipulation rules,
    which it does not appear that that’s what’s happening.
    Which is likely why it was rescinded.
    It seemed a flimsy argument to begin with.
    What if he sold though? Do you have any opinions on that?
    Say he did dump everything.
    It’s America.
    Would that change your opinion on this?
    He’s allowed to.
    I’m not saying he should get an exception and be able to do something
    that any investor isn’t able to do.
    And honestly, again, in the first go round with the meme stocks,
    he was among the most transparent people.
    He came out and said, I haven’t sold, I haven’t sold.
    Okay, I’m planning to sell.
    And, you know, again, this is, it’s strange because it’s very rare
    that an individual investor who is not registered,
    who is not running a fund,
    who is not working in an asset management firm,
    would have this much influence over the actions of other investors.
    If you tell me, Bill Ackman came out and said, you know,
    he’s long a stock.
    I could understand why so many people would want to follow him in.
    This is just one of those weird, fluky things that there’s not much precedent.
    He doesn’t work professionally on Wall Street.
    He’s just an individual and he’s got an army of hundreds of thousands
    of people who want to do what he’s doing.
    And he’s got tens of millions of people who are paying close attention to it.
    It’s really rare.
    I can’t think of another example of it.
    And I don’t think that that means that he should be held to some above and beyond standard
    that no one else is held to, even professional investors.
    Yeah, it’s interesting because it is so similar to everything we’ve seen.
    I mean, you mentioned Bill Ackman.
    I think the other example that Scott’s been talking about is Chimath
    or any of these other guys who have gone on CNBC and pumped the stock.
    And then they indeed do dump the stock.
    It’s a very similar thing.
    I know that people had complaints with some of these guys, but it feels like,
    I hadn’t thought of what you just said, which is the difference with this guy
    is he’s not a traditional player.
    He’s not your average hedge fund manager or investor.
    He’s sort of outside of the in group.
    Do you think that’s why we’re seeing so much chaos and anger and issue?
    Is that why people are taking issue with this because he’s not one of the traditional players?
    Maybe.
    I mean, look, if you’re not a professional, but you buy over 5% of a public company,
    you still have to file notify.
    So that rule applies to everyone.
    And as far as I can see, he is doing what he’s supposed to be doing.
    He is disclosing this activity.
    The fact that he’s not a professional, is that creating chaos?
    I don’t think so.
    I think these are small, heavily shorted stocks with small market caps
    and a torrent of buying from a million people at once,
    especially utilizing options, is going to lead to that sort of wild volatility.
    But here’s the thing about the stock market.
    It’s like going to an amusement park.
    You choose which rides you want to ride.
    I don’t do log flumes.
    I don’t want to walk around with wet sneakers.
    So even if the log flume looks like it’s going to be the best attraction in the park,
    I’m not forced to do it if I don’t want to do it.
    No one is telling any other investor that they need to start trading in shares of GameStop and Chewy and AMC.
    Just don’t take that ride.
    100%.
    Or if you want to take that ride, buckle up and understand what’s happening there.
    And you went through the park, you’re in the investment game,
    but you don’t have to ride all the rides.
    100%.
    I love that.
    We’ve got a guy who is suing the log flume because he got wet at the end of the ride.
    Yeah, maybe get off the log flume is how I would think about it.
    Let’s move on to Buffett and his charitable trust.
    So $127 billion to this charitable trust that’s overseen by his children.
    I’m not one of these radical, effective, altruist guys,
    I do believe in just generally speaking,
    we should be allocating capital efficiently,
    whether that’s in private investment or in, in this case, philanthropy.
    And what’s striking about this move to me is there is no overarching mission or theme or vision as to where this money is going to go,
    how it’s going to be put to work.
    He simply handed it over to his children.
    He said, OK, it’s yours.
    You guys go figure out where to donate all this money,
    which is very different from, say, the Gates Foundation,
    which a lot of people are making these comparisons,
    which has been extremely precise, extremely intentional about its strategy.
    And then I look at this and it’s like, there’s no real strategy at all.
    Maybe I’m being a little cynical.
    It is charity after all and, you know, $130 billion.
    It’s going to make a difference somewhere.
    But what is your reaction to this, to this move by Warren Buffett?
    Do you agree with, with my cynicism?
    I think I disagree, Ed.
    It’s true that Warren Buffett doesn’t specifically talk intensively about, you know, where he wants his money to go.
    But it’s not true that we can be sure there is no plan.
    Understand what’s happening here.
    He’s turning the money over to his family members and they’ve got their own foundations.
    And effectively, he’s putting it in their hands and they are pretty specific in what they’ve done philanthropically over the years.
    We do wealth management for high net worth individuals and a lot of the stuff that we do is involved with funding our clients philanthropy.
    So I have a couple of people in-house who specialize in this sort of situation.
    And I turn this over to them to get their take on what’s been announced.
    And I want to quote Gary Polford, who is in our Orange County office.
    And he said, “I believe what he has created is a charitable foundation with a trust structure.”
    So Buffett is calling it a charitable trust, but we think it’s a foundation that is structured as a trust.
    That is different from a foundation that’s structured as a corporation, which is what you’ll see most of the time.
    The difference here is that if Warren Buffett dies and his money is in a corporate foundation,
    the officers of the corporation can change the bylaws and therefore they can change the philanthropic focus of the corporation.
    This is different. This looks more like an irrevocable trust.
    What makes it irrevocable is if he dies, that’s the end. Nothing can really be changed there.
    So the kids couldn’t in some situations say, “Actually, I don’t want to donate this. I want to keep this for myself.”
    You’re saying that that couldn’t happen.
    Correct. Now, Susie runs the Sherwood Foundation, which focuses on reproductive rights and college scholarships if you read their tax filings.
    Howard Buffett runs the Howard G. Buffett Foundation, which specifically works for food security, conflict mitigation, and combating human trafficking.
    Peter Buffett, the other son, leads something called the Novo Foundation. Those are projects that include working with indigenous communities.
    Warren Buffett is basically saying this, “It should be used to help the people that haven’t been as lucky as we have been.
    There’s eight billion people in the world, and me and my kids, we’ve been in the luckiest one hundredth of one percent.
    There’s lots of ways to help people.” So yes, it’s broad, but no, it’s not that unspecific.
    He knows what the pet causes are of his children, and that seems to be what he would prefer to have happen here rather than set up some corporation
    that ten years after his death could completely choose to go in a different direction.
    Yeah, it seems that he’s also just putting a lot of trust and faith into his kids that they’re going to make the right decisions here.
    I mean, this is basically his life’s work that he’s handed over to them, which is pretty remarkable when you think about it.
    Yes, but it should be pointed out, Susie, Howard, and Peter have spent their lives on philanthropy.
    They’re not software developers, they’re not lawyers, right? So they have always had this responsibility.
    They’ve grown up with it, immense, unspendable, unfathomable wealth.
    This is $130 billion, most of it Berkshire Hathaway stock, and the kids have grown up.
    Kids, I don’t know, they’re in the 60s. The adult children of Warren Buffett are not strangers to giving responsibly.
    Let’s finally move on to this Supreme Court decisions.
    Now, this is different from the presidential immunity decision, which has also been making a lot of headlines.
    We’re focusing on this Chevron decision because, generally speaking, has more of a direct effect on companies and on markets.
    Overall, it’s going to mean less regulation for companies because what the decision does is it withdraws the power from federal agencies.
    It takes away their ability to adjudicate based on their interpretation of the law, and that’s going to be less incentive for companies to comply with federal agency regulations.
    This is generally a win for corporate America. As I’ve said on this podcast before, I feel that corporate America has gotten enough wins recently.
    Do we really need to hand corporate America another win, which will likely come at the expense of a whole host of other things, such as consumer protection and health and safety, and all these things that regulations exist for.
    That’s why we have regulation. What is your take on this?
    So this Chevron thing dates back to 1984, and so for 40 years, this has been a hobby horse of the business community.
    I think the big takeaway here is it’s just a continued rollback of things that the business community doesn’t want.
    One of those things is being called in front of an in-house tribunal, for example, or having a disagreement with a regulator be adjudicated with no jury, with no judge, or with a judge, but under the terms of the agency itself.
    And the Supreme Court just ruled against the SEC and their use of in-house tribunals as being unconstitutional in a case on June 27th, Supreme Court versus Jarkeesie.
    So this is somebody that the SEC was seeking civil penalties for securities fraud, and Jarkeesie’s argument was, “No, the Seventh Amendment requires you to bring this to action in a court of law, and I am entitled as a defendant to a trial by jury.”
    So this will slow down, I think, the ability of government agencies to quickly interpret the rules that Congress has set up and then make a judgment.
    It’s definitely a victory for the Chamber of Commerce, folks. I don’t think anyone would argue otherwise.
    Scott is certainly very pro-regulation, and he makes that opinion very clear. I think I would say I feel the same way. How do you feel about this as an investor, as someone who has a financial interest in the success of corporate America?
    I’m pro-regulation, so my wealth management firm is 10 years old. We’ve already had two on-site examinations, which is pretty much the standard. Somewhere between three and five years, a registered investment advisor should expect the SEC to send a letter and then follow up and conduct an examination.
    And, you know, it’s a lot of work. It’s a ton of document production. It’s a ton of back and forth. But in the end, if that doesn’t happen, if that doesn’t exist, no one would trust a registered investment advisory firm like mine.
    We’re doing business in all 50 states. If there’s this sense among the general public that nobody’s paying attention and there are firms doing whatever they want and running through the rules willy-nilly, it doesn’t benefit us.
    So I actually, the way I think about regulation on Wall Street and in the investment advisory world, it’s a barrier of entry to bad actors, and it increases the public trust.
    And they don’t see it. The public doesn’t really see all of the work that regulators do. They hear about things every once in a while when there’s a blow-up, like the Arkegos hedge fund, for example, or Bernie Madoff or FTX.
    But they don’t see the day in, day out, dotting eyes and crossing T’s that, in my opinion, keeps the train on the track.
    So I’m pro-regulation. And, you know, I think the thing that we always have to guard against as a society is regulatory overreach.
    When somebody at the head of an agency decides that they want to redefine what the rules are and they want to use fines and they want to use public executions as the way they’re going to do that.
    Like, I think that’s the other end of the spectrum that, of course, nobody wants to say.
    Would you say that you’re alone in that opinion in terms of people on Wall Street? Are you a rare breed?
    No, I wouldn’t say that. There are 18,000 registered investment advisory firms. And I think what they mostly have in common, of course, a few bad apples at all times.
    But what they mostly have in common is their rule followers. The type of people who are attracted to wealth management are not renegade, rockstar, Steve Jobsian, you know, geniuses who want to break the rules.
    It’s just not the type of people who gravitate toward our side of the business.
    So I don’t think I’m alone in that. I think if you talk to a typical investment advisor, and again, we’re not a hedge fund.
    We’re not high-flying investment bankers. If you talk to a typical person in my neck of the woods, in my part of the industry, they would probably say something similar to what I’ve just said.
    Alright, we’ll be right back with Josh’s reaction to the presidential debate.
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    We’re back with “PROFG Markets”. The presidential debate was largely considered a disaster.
    While Trump was his usual chaotic self, Biden showed much more notable signs of age than he has previously.
    His answers were slow, halting, and confused. By the end of the night, even prominent Democrats were calling for Biden to step aside for a new candidate.
    Now, Josh, we’re going to discuss Wall Street’s reaction to this debate, but I first just want to offer an observation about this idea of managing expectations.
    And this is something we talk a lot about on this show, particularly as it relates to earnings calls.
    And that is, if you are a company and you’re about to report a bad quarter, let the market know ahead of time.
    Give them some signals. Tell them maybe it’s the demand is softening or that the macroeconomics aren’t as good as they used to be.
    Give them some guidance and make it clear that you know what the problems are and you also know how to address them.
    Now, let’s shift to Biden’s performance here in this debate.
    This to me was like delivering the worst earnings call ever and at the same time doing nothing to prepare your investors for it.
    He had, you know, this weak, raspy voice. They’re saying he had a cold. Tell us he had a cold ahead of time.
    Tell us that he’s tired. Tell us, you know, maybe he’s not as good as he used to be. That’s what he’s now saying.
    But tell us something and don’t lie to us that he’s sharp as a tack and then suddenly shock us with the reality of the situation on the biggest stage in the world.
    You are, you know, you’re a student of the markets and I feel like a lot of markets is just communication.
    Is this not one of the worst PR management disasters you’ve ever seen?
    You know, look, I’m not I’m not a partisan like I’m not I’m not somebody that’s overly political. But I think I think even even if you’re even if you’re someone that is hoping the Democrats win the White House or you’re OK.
    I don’t think Biden has like diehard Biden fans. But like if you’re a pro Biden person, it’s probably because you’re anti Trump or anti Trump’s policies.
    Right. Fine. But so even if you’re in that camp, a couple of things you have to admit. Number one, it was the Biden camp that wanted the debate.
    So talk about mismanaging expectations. Not only did they not sandbag or give you any sense that, hey, guys, debating is not really his thing.
    Right.
    They actually pushed they actually pushed for it. Trump would have been perfectly happy to have no debates. He doesn’t need them.
    He doesn’t he doesn’t necessarily win as a result of debates. He wins as a result of the rallies and his own social media activity.
    So he didn’t. So so not only did they not manage the situation or prepare us, it went hard the other way.
    It gave people the impression that Biden was about to kick the door down. The other thing I would say is he’s never been good at this.
    He was good. He was good enough at debates throughout his career, but I don’t think I’ve ever seen him do well in a situation where you’ve got to come up with rapid fire answers.
    He’s got a stutter even when he was younger. This is just not his strong suit. I heard some of the coverage on MSNBC.
    I was curious to hear if there would be as much panic there as there was at CNN. There wasn’t.
    Oh, there wasn’t.
    There are prime time people came out the next night and said, Lawrence O’Donnell, his monologue is no president as part of his duties as the president ever has to debate anyone else in a format like this.
    It’s not part of the job. It may be a part of how you get the job, but it’s not part of the job. So don’t worry.
    If that’s the best argument for why we should just gloss over this, the impression that people now have is everything the anti-Biden people have been saying is wrong with him has now been confirmed.
    We’ve all seen it with our own two eyes. So you could say, well, who cares? He never has to debate again once he wins. All right, fine. But for most people, that’s not the takeaway they’re going to have.
    The takeaway they’re going to have is this is not the guy right now.
    Yeah. Lawrence O’Donnell can gloss over it all he wants, but look at the prediction markets. Biden’s chances of winning fell 30% after that debate. So a huge drop.
    Well, so from a market perspective, the knee-jerk reaction that we saw was what’s called a bare steepener. So in English, we saw the two-year treasury rise about five basis points, very little, because everyone knows the short-term rates are coming down.
    They don’t come down by the end of this year. They’ll be coming down next year. But longer-term rates is where the action was.
    And so you had that steepening of the yield curve, which is indicative of Wall Street placing a bet that the Trump tax cuts, the Tax Cuts and Jobs Act 2017 tax cuts will be extended because it’s less likely that Biden will win, more likely that Trump will win.
    And that’s also sort of pricing in a faster economy, the rise in 10-year rates. So that was the Wall Street reaction. And if you look at the betting marketplace predicted, that’s confirming that.
    And the reason why I like predicted better than polls, predicted is people buying contracts on Kamala Harris, on Biden, on Trump winning the election. And that’s people putting up their own money.
    Not people blowing smoke at a pollster or people virtue signaling to their neighbor. That’s like actual dollars being bet. And immediately, you saw Trump separate himself from Biden, and you saw the Harris contract pick up steam as well.
    That’s a great point. Just going back to the Treasury yields, you mentioned that that’s Wall Street placing a bet. One, placing a bet, I assume, that Trump is going to win. And two, that the tax cuts will go through. How does the tax cuts going through relates to higher yields?
    Let me just clarify that. The tax cuts aren’t going through. The issue is that they will sunset at the end of 2025 if they are not extended.
    So a Trump presidency means a higher likelihood that he will be signing the bill in the White House that extends those tax cuts. Why is that meaningful on Wall Street?
    Well, number one, we’re not going to have a billionaire’s tax, which is a minimum 25% tax on billionaires. One of the difficult things about taxing billionaires is they don’t exactly have W-2s.
    So they’re not paying income tax the way people that are on a salary pay income tax. But more importantly, the corporate tax rate under Trump was taken down to 21%.
    Biden says he wants it up at 28%. That would have a material impact on the stock market and probably on economic growth. So that’s really acutely felt in stock prices.
    Number two, or number three, the buyback tax, Biden wants to quadruple. I think it’s a 1% excise tax on share buybacks and Biden wants that to be 4% or 5%.
    Again, that would have a material impact on the stock market. If those things are not going to happen and the TCAJ is going to be extended, then you would bet on faster economic growth.
    That curve steepener makes sense in the Treasury curve. And you would certainly bet on a better stock market. And I think that’s exactly what the reaction was to the debate.
    It sounds like Wall Street, all they care about really are the tax cuts. I want to bring up one other economic proposal that Trump has proposed, which is the tariffs.
    He wants to charge 60% on goods coming from China and 10% on goods coming from everywhere else, which every economist has said is going to make everything in America more expensive.
    And the number that they’re saying is that for middle income families, it’s going to be an extra $1,700 per year. Larry Summers called it, quote, “a prescription for the mother of all stagflations.”
    These tariffs, and by the way, I can’t tell if he’s actually serious about them. I mean, I can’t tell if it’s a legitimate proposal or if he’s just saying it to kind of rally up the base.
    But these tariffs seem to me to be probably the worst economic idea that Trump has ever come up with. Is Wall Street not more worried about this? I mean, couldn’t this lead to…
    I mean, if Larry Summers is predicting stagflation, this could lead to a depression. Why doesn’t Wall Street care about this?
    Wall Street doesn’t think he’s going to do it. I think part of the way Trump operates is he throws something out there to provoke a reaction.
    We saw him do that with NATO. And look, again, I’m not like a Trump guy, but you can’t argue with the fact that he threatened to pull out of NATO.
    And within a month, Germany, France, all of these countries started writing checks again and honoring their commitments to NATO.
    So in a very weird way, his threatening of NATO, which at the time looked like, oh my God, he’s about to roll back a 50-year, 60-year peace we’ve had since World War II.
    But in reality, the effect that that provoked throwing that out there and just like a grenade and just letting it go off, the effect that that provoked actually strengthened NATO.
    So look, there was a meeting of CEOs with Trump, I think, last week. Nobody does press after that.
    People are like sneaking into the building. Nobody wants to be seen talking to him.
    But I think there’s the public Trump who throws grenades. And then I think there’s the private Trump who’s much more pragmatic.
    And one of the observations that I had about Trump during his first term, where I wasn’t so freaked out every time he tweeted something,
    he sort of agrees with the last person he talks to.
    Now, the problem in the first term was he had this maniac, I forget the guy’s name, Peter or something or other, as his economic advisor,
    maybe one of the ones that’s like indicted or something now, who had written a book about why China needs to be tariffed into the Stone Age.
    So that was a guy in his ear. He had ban in his ear. He had China hawks, professional China hawks in his ear.
    But he does kind of have a tendency to just like sort of listen to whoever the last person he talks to.
    And as evidence of that, he got a meeting with Kim Kardashian.
    And the next thing you know, he was freeing people from prison. That was not the platform, the tough on crime pro law enforcement platform.
    So that’s why I’m not so freaked out about it. The third thing I would say, the experience of 2018, I think, taught him something.
    There were two separate 20% declines in the S&P 500 in calendar 2018.
    The Fed played a role in that. The Fed was tightening during the onset of those Chinese tariffs.
    So if you think back, 2017, the S&P went up like 25%. It was a great year. Why? We got the Tax Cuts and Jobs Act in November or December.
    So the market ran up into that. We were pricing it in in advance.
    2018, you get like an 18% sell-off in February. You get another one into Christmas Eve.
    Both of those caused by global economic strain as a result of the first round of Trump tariffs.
    I think he’s heavily fixated on the stock market. And I think he does not want to repeat what went on in 2018, which, by the way, was not a great midterm election for him.
    The tariffs were unpopular on both sides. So I’m not as worried about that as maybe other people are.
    It’s interesting because it sounds like what you’re saying is Wall Street just believes to its core that Trump is on Wall Street side.
    Well, he is. Exactly. And even if he says that he’s going to go through with these tariffs, they’re like, “No, he won’t.”
    Because ultimately, his true loyalty lies with us and he’s not going to do anything to piss us off.
    Or he will do them. And then when he pulls them off, the Dow Jones will go up a thousand points. You see?
    That’s a good point. Yeah.
    You see, there’s an element of showmanship. There’s an element of bluffing. And he gives himself the option of saying he’s going to do this big bad thing,
    seeing how other people react to it. And then at the last minute, saving the day by calling it off.
    Dude, I don’t want to ascribe too much like strategy to him or give you the impression that I think he’s playing 12-dimensional chess.
    But just going by the first term, to say that because he said something from behind a lectern, it’s definitely what he’s going to do.
    I think it would be a really big mistake.
    We’ll be right back. Stay with us.
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    We’re back with Prodigy Markets.
    Shifting focus to the stock market itself, there’s been some debate on which candidate would be better for the stock market.
    So just some numbers here.
    The S&P generated an annual return of 16% during Trump’s tenure under Biden.
    The number was 12% or 12% so far.
    At the same time, on average, markets have performed better under Democrat presidents versus Republicans.
    12% under Democrats, 8% under Republicans.
    Slightly an obtuse question, but we’re having fun here.
    Which candidate do you believe would be better for the stock market?
    On the surface, I think the stock market itself, if I can anthropomorphize the billions of trades that go through each day,
    I think the stock market itself believes it would be better under Trump.
    We’ve done tons of work on this.
    And the actual reality is this is very fluky and dependent on factors that have nothing to do with who the president is.
    Clinton comes in immediately following a recession and the savings and loan crisis in the early 1990s and the spike in oil prices as a result of the first Iraq war.
    He comes in and it just so happens that the internet and mobile telephony both basically have their renaissance during his second term.
    It’s nothing that he did.
    Barack Obama took office literally after Lehman Brothers went under and made off and the great financial crisis.
    He had one of the all-time great starting points.
    He was sworn in on January 20, 2009.
    The stock market bottomed in March of ’09.
    Are we going to say that Barack Obama’s policies led to the stock market tripling or did he inherit a stock market that had just been cut in half?
    Twice in seven years, by the way.
    So these things are very fluky.
    I think the other thing to observe is actually the best outcome is a president from one party and either party, it doesn’t matter.
    And a Congress that’s under the control of the other party.
    Those actually are the things that have led to the best possible outcomes.
    And let’s go back to Clinton.
    He’s in the White House.
    Newt Gingrich takes over Congress in ’94, contracts with America.
    And we get six years of incredible prosperity.
    So it’s not true that any one party is necessarily better or worse for stock prices.
    The real story is that stocks go up three out of every four years.
    This goes back 95 years.
    You could tell me at some point that paradigm will shift.
    Okay, maybe.
    But really what’s more important in the long run is corporate profits and interest rates.
    And here’s the setup right now.
    All 11 of the S&P 500 sectors are expected to have earnings growth in calendar 2025.
    And we know that the Fed’s next move, whether it happens in July, September, December is lower.
    So if I tell you the most important things are corporate profits and interest rates, the setup is not looking bad, regardless of which these guys ends up winning in November.
    Yeah, we’ve had the best half of an election year for the stock market.
    And this is the best half in 50 years.
    The S&P is up nearly 15% year-to-date.
    And that’s also saying something because generally speaking, if you just look at the data, election years have been pretty good for the stock market.
    But it sounds like you’re saying that we could expect this to continue regardless of the candidate.
    I think you’ll get some volatility as we get closer to the election.
    One thing that’s interesting, my firm’s chief market strategist put out a note last night, Callie Cox, she notes that the month of June is the calmest month for stocks in five years.
    We’ve had effectively no volatility so far this summer.
    We haven’t had a down 1% day for the S&P 500 since April.
    She went back and looked at 50 years of market history and on average, so half the years more, but on average, the S&P 500 has seven down 1% or worse days during the course of any given summer.
    So I would say the incredible calmness in the market that we’ve experienced in June historically should not be expected to be repeated in July and August.
    So we are, I think, in a really interesting place because of the AI boom, the nature of the companies that are involved in it.
    They happen to be the most stable companies with the most stable cash flows, the biggest cash cushions, the largest market caps, the most institutional support.
    And that is why we’ve had this placid S&P 500 beneath the surface.
    There’s been much more turmoil.
    It’s just that those stocks are so much smaller and less consequential that if you’re an index fund investor, which more than half the population is, you don’t feel the volatility of those individual stocks.
    It’s very interesting because you mentioned that because the political volatility is higher than ever right now and then you compare that to the stock market and the market’s reaction and you’ve just described it as placid.
    Has it surprised you just sort of the lack of correlation between the two?
    I don’t believe the political volatility is higher than ever.
    In 1998, Bill Clinton spent that year testifying about sleeping with interns and whether or not he lied about it.
    But there were impeachment proceedings and 1998 was an incredible year for the stock market.
    Why?
    Because the market doesn’t prioritize political volatility.
    The market prioritizes, remember what I said, earnings growth or lack thereof and interest rates.
    We had had a massive interest rate cut, emergency cut in the summer of 1998 after the currency crisis rippled through Asia and Russia.
    And in the meanwhile, we had this internet build out, this Y2K build out that was propelling earnings, not just for tech, but for the entire economy.
    And so as a result, that political volatility, which I would argue is as great or greater than what we’re experiencing at this current moment.
    It’s debatable, but fair.
    Well, Trump had two impeachments.
    We had that volatility.
    And it’s back.
    We had a riot at the Capitol.
    You would argue this is more volatile than that.
    I wouldn’t.
    Yeah, I don’t think it was more volatile than that.
    But it goes to a larger point, which is that the market seems to be largely unresponsive to those sort of volatile events.
    I mean, what we saw during the pandemic too, and the market was generally doing very well.
    And it didn’t seem to be tied to whatever fundamentals were happening in the market did not seem tied to what was happening in politics.
    Do you think that generally that we maybe overestimate how the two are connected?
    Well, I don’t think professionals do.
    I think civilians overestimate.
    I think they draw connections that just aren’t there.
    When the market reopened after JFK was assassinated, it went up.
    Most people don’t know that.
    Did not know that.
    It’s so interesting.
    No, I think it only took five months for the market to regain what it had lost after 9/11.
    So this idea that geopolitics has this sustained impact on stock and bond prices is just flatly incorrect.
    It’s just incorrect.
    In fact, it’s World War II that put an end to the depression.
    Yeah.
    So one of the things that people forget, look at the pandemic.
    2020, the stock market closed higher.
    So if I told you in January, hey, Ed, two months from now, your employer is going to tell you to stay home for the rest of the year.
    The kids will be out of school nationwide.
    A million Americans are going to die.
    The president is going to pretend that nothing’s happening.
    There’s going to be a black plague spreading around the earth.
    Would your assumption be stock market ends the year up?
    Absolutely not.
    The thing that people forget is that when something negative happens in geopolitics, there is usually a policy response.
    And that policy response is just keep shopping.
    Yeah.
    More growth.
    Here’s money.
    Yeah.
    Buy fucking meme stocks.
    Here’s money.
    Go open your Robin Hood and gamble.
    I wish I could say it more artfully.
    So I think you have to know the history.
    You have to understand the history.
    I’m not saying, oh, never worry about anything.
    I’m just saying for every action is a reaction.
    And for every geopolitical crisis, there’s probably going to be a policy response if it affects the economy.
    And those policy responses lead to higher earnings, higher profits, higher stock prices, not immediately, but ultimately.
    You and I are talking right now within 3% of all-time highs for the S&P 500.
    What else could you conclude?
    Just to wrap up here, what would your advice be to investors when they read the news?
    I mean, it’s going to be–
    Don’t read the news.
    Yeah, I was going to say, is it don’t read?
    Don’t pay attention.
    Don’t worry about it.
    How much should we be– because it’s going to be an assault.
    Okay.
    It’s not don’t worry about it.
    It’s don’t react to it.
    That’s the answer.
    Now, if you had been reading reports in early 2020 from the Italian Alps or dispatches from Wuhan, China, and you had gotten this idea that, you know what?
    This sounds really bad.
    This sounds like it’s going to get much worse.
    I’m selling my stocks.
    You might have had a temporary reprieve where you would have said, “Thank God I got out.”
    You know how long that lasted for?
    11 days.
    11 days.
    If you had done the same thing a generation earlier during the Ebola scare, which I think was 2014, you would have missed out on some of the best years in the S&P had you not known when to buy back in.
    So it’s not don’t worry about it.
    Definitely worry about it.
    The better thing to say is don’t think that your reaction is going to be the right one.
    And don’t think that there’s some sort of logic whereby something scary happens in the news.
    Therefore, something scary is going to happen in the market.
    I love that.
    Let’s take a look at the week ahead.
    We’ll see the consumer price and producer price indices for June and second quarter earning season kicks off with JP Morgan, Wells Fargo, Citi, and Black Rock all reporting.
    And finally, we will get the lowdown from Scott on his vacation in Greece.
    Josh, thank you again for filling in today.
    You have a book coming out September 3rd.
    It’s available for pre-order now.
    Could you tell us a little bit about it?
    Yes, the book is called You Weren’t Supposed to See That.
    And some of the things that we talked about in terms of inequality and the issues with our economy and why it’s not working for anyone, those things are in part the focus of the book.
    So I have much more to say on these topics and you will be able to read all about it this September.
    And Josh, where should people follow you?
    Just don’t.
    You’ll find Josh.
    I have a podcast that’s called The Compound and Friends.
    It’s twice a week.
    We talk markets.
    I’m not like doing Twitter shit.
    Don’t worry about following me.
    You’ll be better off.
    I’ll be better off.
    It’s fine.
    As the CEO and co-founder of Ritholt’s Wealth Management, his new book You Weren’t Supposed to See That, Secrets Every Investor Should Know, is available for pre-order now.
    Josh, you are the hero we need and don’t deserve.
    Thank you so much for joining us.
    Thanks, Ed.
    And thanks, Scott, for the shot.
    And I’ll be listening next week.
    Thanks, guys.
    This episode was produced by Claire Miller and engineered by Benjamin Spencer.
    Our associate producer is Allison Weiss.
    Our executive producer is Jason Stavins and Catherine Dillon.
    Mia Silverio is our research lead.
    And Drew Burrows is our technical director.
    Thank you for listening to ProfG Markets from the Vox Media Podcast Network.
    Join us on Thursday for our conversation with Anthony Scaramucci, only on ProfG Markets.
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    Josh Brown, co-founder and CEO of Ritholtz Wealth Management, fills in for Scott to talk about how the markets reacted to the Presidential debate. Then Josh and Ed discuss how Trump and Biden presidencies could impact investors and Josh breaks down why he isn’t concerned about Trump’s potential tariffs on China. 

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  • First Time Founders with Ed Elson – This Founder Raised $900M to Power the Grid

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    AI transcript
    Support for Prop G comes from BetterHelp Online Therapy.
    We waste a lot of time worrying about what we haven’t done,
    and this may sound a little corny,
    but taking a second to appreciate your wins is important.
    Personally, this year I am spending more time with my boys.
    Good for me. If you’d like to celebrate your own wins
    and make some adjustments for the rest of the year,
    BetterHelp Online Therapy is a great place to start.
    It’s entirely online, which makes it more convenient
    and more affordable than traditional therapy.
    Take a moment, visit BetterHelp.com/ProphecyToday
    to get 10% off your first month.
    That’s BetterHelp, H-E-L-P, dot-com, slash, Prop G.
    Support for Prop G comes from Vanta.
    Building a business, achieving SOC2,
    where ISO 27001 compliance can help you in bigger deals,
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    Get $1,000 off Vanta by going to Vanta.com/Prophecy.
    That’s V-A-N-T-A, dot-com, slash, Prop G.
    – Scott, you recently wrote a post on your blog
    No Mercy No Malice about the energy industry
    and your predictions for what is going to happen
    in terms of our energy consumption
    and global energy demand.
    Could you summarize what your thoughts are there?
    – We always find a way to put energy to work.
    And I think that essentially when you look at
    the problems around carbon and global warming,
    and then you couple that with so many nations developing
    who are producing hundreds of millions of people
    coming into the middle class,
    and what happens when you come into the middle class?
    You start getting a car,
    your energy consumption goes up,
    you start eating more beef.
    All of these things that require a ton more energy.
    The demand here isn’t satiable.
    And so people who come up with whether it’s nuclear
    or some sort of different renewable
    or near self propulsion machines in the ocean,
    whatever it is, that is gonna create a lot of billionaires
    and maybe our first trillionaire.
    (upbeat music)
    – Welcome to First Time Founders.
    Here’s a stat I learned recently.
    A chat GPT request consumes 10 times more energy
    than a Google search.
    We’re in the early innings,
    but AI is already using up more power than small nations
    and that consumption is expected to triple
    by the end of the decade,
    which leaves us with an existential question
    for our planet.
    How are we going to keep the lights on?
    My next guest is a pioneer in energy,
    specifically energy storage.
    After designing batteries for Elon Musk
    as Tesla’s director of energy,
    he decided to start his own company
    to help us store energy cheaper and for longer.
    Over six years, he raised $900 million in funding,
    built a 1 million square foot battery factory
    in West Virginia and will soon deploy
    the biggest battery ever created.
    There are a few individuals alive today
    who have had a bigger impact on the energy industry
    and its future.
    This is my conversation with Matteo Haramio,
    CEO and founder of FormEnergy.
    Good to see you Matteo.
    – Good to see you Ed, nice to be here.
    – Let’s get right into it
    ’cause I know that you don’t have all the time in the world.
    So, we’ve been discussing energy a lot
    on this podcast recently, more than usual,
    and it’s been coming up a lot mostly because of AI.
    Just a couple of stats that really grabbed our attention.
    One is that energy demand for AI
    is currently doubling every hundred days.
    And two, partly as a result,
    the total amount of energy consumed by data centers
    is expected to triple in the next six years.
    And for context, that would be enough energy
    to power 40 million homes in America.
    Now, I know there’s a lot more
    to the energy conversation than AI,
    but I would say that the key takeaway that we’re learning
    is that basically in the next few years,
    we’re gonna need a ton more energy,
    far more than we produce today,
    and we’re gonna need new innovative solutions
    to generate, store, and distribute that energy,
    which is exactly what you are doing
    with your company, FormEnergy.
    I’d like to start with some very basic stuff
    before we get into you and Form.
    Your mission is to, quote, transform the grid.
    I hear that term a lot, the grid,
    the electric grid, the power grid.
    What actually is the grid?
    The grid is perhaps the most complex machine
    that humans have ever made, and also the largest.
    In many ways, think of it as a single integrated entity
    by continent, more or less,
    where we are simultaneously producing
    and consuming a commodity at the same time.
    And in the case of the electric grid,
    that is, of course, electricity.
    And today, that’s happening on every continent
    in slightly different ways,
    but largely what we do is we generate electricity
    in one location, and we move it to where it’s needed,
    where the demand is, where what we call the load sits.
    And so we have this reconciliation that’s happening
    on a sub-second basis, in fact,
    micro-second basis for production
    and consumption of a good.
    So that’s what we’re talking about when we say the grid.
    It’s basically the electric system, the production,
    the, or generation, as we say, the transmission,
    the distribution, and then the consumption.
    But you are an innovator in storage,
    and I don’t think you mentioned that word
    when you described the grid there.
    I don’t think a lot of people understand or appreciate
    what a significant industry that is,
    let alone realize that it actually exists.
    Give us a rundown on energy storage.
    What is it?
    What are the different types?
    How does it play into this complex system
    which you described, which is the grid?
    – Yeah, and part of the reason I didn’t mention it
    is because one of the reasons why the electric grid
    is so impressive as a feat of engineering
    is because it doesn’t use a lot of storage, in fact.
    It’s sort of counterintuitive, at least not in the,
    from the generation to the consumption side of things.
    Think about any other very large industry.
    It could be retail, refrigerated goods.
    It could be data.
    We have data warehouses.
    It could be, you name it, there is a version of inventory
    that sits somewhere between production and consumption
    because it’s a natural thing to do, right?
    That’s how we sort of move things around
    and become efficient at that.
    Whereas on the electric grid,
    we’re doing all of that in real time, right?
    Generation and consumption.
    There’s upstream versions of storage.
    We have liquid fuels or we have coal
    or we have these kinds of things.
    But in between the generation and consumption,
    we don’t have a lot of storage.
    So this is a growing area
    because there is a growing need for storage
    because now we have different kinds of generation.
    We do not have those fuels in many cases
    to just store and have sit around until we need them.
    Yes, we still, of course, do some of that,
    but increasingly in very large volumes,
    the lowest cost version of electricity is the renewables.
    And these are, by definition, weather driven renewables
    and therefore intermittent, right?
    They go away and they come back.
    And so we need to think about the storage
    that we need to reconcile these generation resources
    at the scale that is really impacting
    the entire electric system.
    Now there has been electric storage on the grid
    from the beginning because people did realize
    some of this is a challenge and primarily it was water.
    So you sort of had water up on a hill, more or less,
    and you would run it through a turbine
    going down the hill to generate electricity.
    And then during periods of low cost,
    you would pump it back up the hill.
    And so that’s been sort of a known way
    to use energy storage for a very long time.
    And of course, we rely on nature’s natural mechanism
    for that, which is snow in the mountains,
    which very helpfully melts during the other half of the year
    and sends water downstream that we sort of capture,
    which we then put to productive use.
    And so the question now is,
    how do we bring more types of energy storage
    onto the grid cost effectively and at scale,
    such that we can incorporate even more
    of these low cost, renewable,
    but intermittent sources of electricity.
    – So it sounds like then coal, oil,
    those are both energy producers
    and examples of energy storage.
    That would be right.
    – Exactly, in some ways, yes.
    And I mentioned the use of energy storage
    paired with renewables,
    but in fact, they can also be very effectively paired
    with those conventional resources as well.
    So I mentioned sort of intermittent weather,
    sun going down, some coming back,
    but we also live in increasingly volatile weather environment
    where we have these storms, extreme heat or extreme cold.
    And that is also stressing the way
    that we have generated electricity for a very long time.
    So look at the winter storm, Yuri,
    which was this storm that happened a few years back in Texas
    and cost $60 billion worth of damage,
    you know, this sort of unprecedented freeze
    in the middle of February in Texas, right?
    And one of the major reasons why the blackout lasted
    as long as it did and was so impactful
    was because the natural gas resources
    were frozen in place more or less.
    In other words, you couldn’t access the stored energy, right?
    And so that’s another way that we’re looking to say,
    well, what is a non-correlated way to store this energy
    in such a way that we have just a really reliable,
    robust system overall?
    Because increasingly,
    I’m sure we’ll talk about this on the AI front,
    increasingly electricity is a requirement
    to operate the modern society.
    There’s a woman who runs a utility
    called Portland Gas and Electric Maria Pope
    and she’s a leader in the industry
    and she’s fond of saying that electricity
    may only be 2% of GDP in the United States,
    but it’s the first 2%.
    And, you know, everything else sort of relies on that 2%.
    And so having different kinds of energy sort of show up
    in ways that hasn’t been required to previously
    becomes a really interesting and compelling
    and fun, frankly, aspect of sort of where we are
    in the electricity industry.
    – So it’s almost like, I mean, just to put it very simply,
    you know, wind turbine is generating the energy
    from the wind, but it’s not necessarily storing it.
    And as we increasingly rely on renewables,
    we’re gonna need more ways to store that energy
    in a way that, and I love that point you made that,
    you know, the freezing weather conditions,
    we couldn’t even access those more traditional forms
    of energy storage, which brings us to batteries.
    I think some people, maybe not everyone,
    has heard of the lithium-ion battery.
    I feel like there’s been this increased interest in lithium.
    That’s what I understand to be the,
    what do we wanna call it, blue chip battery
    that we have been using for energy storage for however long.
    You have a different battery called the iron-air battery.
    What’s the difference between this traditional battery
    we’ve been using for the past however many decades,
    I actually don’t know, versus your battery,
    the iron-air battery?
    – Yeah, so lithium-ion has been around for some time.
    It was sort of first discovered in the late ’70s, early ’80s.
    There’s different variants of that battery.
    So lithium-ion covers a class of different kinds
    of those batteries.
    And it was commercialized in the ’80s for camcorders.
    So pre-cell phone, of course,
    you had to have a dedicated device,
    which was a shoulder-mounted camera,
    you know, this huge bulky thing,
    but was an enormous success commercially
    because for the first time you were untethered,
    you don’t have to keep this thing plugged in,
    and you could walk around, you know,
    your kid’s baseball game or a wedding or whatever it was,
    and, you know, take video footage.
    That’s why lithium-ion was commercialized.
    And lithium-ion is a wonderful chemistry,
    principally because of density.
    So you can cram a lot of energy
    in a very small amount of volume,
    and it doesn’t weigh very much.
    And so it enabled all these subsequent
    consumer electronics applications,
    the ones that we sort of take for granted today,
    laptops and, you know, phones that fit in our pockets,
    and they are literally right next to our existence.
    We’re so reliant on them.
    And so it’s no surprise that we’re also using
    a lot of lithium-ion batteries for the electric grid
    because it’s a proven technology.
    It’s now being made at massive scale,
    especially thanks to the automotive industry,
    which is driving that scale and cost down.
    And largely what they’re doing is helping to meet the peak
    of the electric grid.
    So think about the patterns of electricity consumption
    that happened throughout the day.
    They follow the patterns of human existence, right?
    So very quiet at night,
    and then they ramp up during the day,
    and there’s a peak that you see,
    which happens in the middle of the day,
    when sort of activities at its greatest,
    and then it comes down over the course of the night
    and sort of goes to bed, if you will.
    And historically, we’ve used coal or natural gas
    or hydro to sort of match the cycles.
    We turn things on and off or ramp them up or down,
    and batteries being wonderful coming on
    when we need them and going off when we don’t need them.
    That’s the very first application for lithium-ion
    on the grid as well, is to meet those peaks,
    those relatively short duration peaks
    that we have as an electric system.
    Because again, we need to reconcile all of this
    in real time, right?
    Let’s use it or lose electricity.
    And so having these batteries show up
    instantaneously and provide that power
    exactly when we need it for a few hours,
    and then go away, that that’s a very helpful function
    for electric storage.
    One key feature of lithium-ion, or any direct battery really,
    is that duration goes hand in hand with cost.
    In other words, you can’t really separate
    how long you discharge it from how much it costs to do that.
    Because it all comes down to that.
    And lithium-ion is great from an energy density standpoint
    and from a cycle standpoint.
    You can charge and recharge it many thousands of times now.
    It is not so great, comparatively speaking,
    from a cost standpoint.
    And so for the purposes of the electric grid anyway,
    phones and laptops and cars are quite different.
    But from the electric grid standpoint,
    it’s cost effective to only discharge it
    for a few hours at a time.
    In other words, generally between two
    and four hours duration.
    Anything longer than that,
    it’s really just not cost competitive.
    And so think about the landscape of the electric grid.
    We have to solve all of the challenges of intermittency,
    not just a few hours at a time.
    We’ve got to solve for seasonal imbalances.
    We have to solve for extreme weather
    that sits around for a week or for four days
    or whatever it might be.
    And so to solve those problems,
    we need to start to look to other types of energy storage
    that really can be cost effective
    over those much longer durations
    than just a couple of hours at a time.
    – Which brings us pretty nicely to the iron-air battery,
    which from my understanding,
    it lost several days in comparison.
    – One of the reasons why we liked this technology
    was it had been demonstrated.
    You can rust and unrust iron reliably many times,
    but it had never been commercialized
    because it didn’t have a killer app.
    It was first investigated in the 1970s in the United States
    under actually a grant from the U.S. Department of Energy
    to Westinghouse, which was one of the main electric entities
    at the time, as well as a Swedish national lab
    right around that same time as well.
    But when they sort of dug into it,
    iron-air batteries are not very suitable for vehicles
    or for consumer electronics or for anything else, frankly.
    And so it sat on the shelf relatively speaking
    for about 50 years.
    And when we were starting form about seven years ago,
    we went looking for things that did exist,
    but which had never been commercialized.
    And we saw iron-air and we said,
    this looks like now there is a killer app.
    And that killer app is on the grid
    for much longer duration
    than any of the other technologies can go after.
    And it’s, again, because of the cost, right?
    If we need a certain duration to be much longer
    to bridge those multiple days of interment,
    say that we face where the weather volatility,
    broadly speaking, then we have to come in
    at a much lower cost to get that much longer duration, right?
    That’s sort of the inevitable trade that you make.
    And so that’s what we sort of picked up off the shelf
    and dusted off and said,
    now let’s apply 50 years of human knowledge
    in electrochemistry, right?
    Battery development, corrosion science,
    knowledge of iron, right?
    All these things and go commercialize that battery.
    Not just prove that the science works,
    but build a device at Scalva Manufacturing Facility
    and keep the cost entitlement where it is
    and drive performance further
    than even what they thought they could get 50 years ago.
    And so that’s what we’ve been doing.
    That’s been the work of the company
    is to really drive this commercialization of iron air
    as a chemistry into the world for the first time.
    – What has the demand for these batteries
    looked like in the past couple of years?
    It appears, I mean, especially based on the amount of funding
    that you’ve secured that there is already
    a serious need for these.
    Is that what you’re experiencing on the sales end?
    – Yeah, absolutely, and of course,
    the picture changes quickly, relatively speaking.
    So when we started the company, we said,
    we’re gonna build a 100 hour battery
    that’s one-tenth the cost of living mind.
    And people said, a lot of people said,
    oh, well, that’s not gonna be relevant for 20 or 30 years.
    Good luck, right?
    It’s gonna take forever for a market
    to show up for that kind of thing.
    And what very clearly fell out of that really detailed
    analysis that we ended up doing with utilities, by the way,
    was if you can have a 100 hour battery at the cost point,
    ’cause those two things go together,
    then you drive a whole new asset class
    on the electric system,
    and there’s a huge amount of value right now.
    You don’t have to wait 20 or 30 years.
    You can address pockets of that intermentancy
    or reliability challenges or whatever else
    they might be right now,
    because it’s just another cost-effective asset.
    Doesn’t even really matter.
    And so that came out very, very clearly.
    And we started working with these utilities.
    So our customers are those utilities, right?
    If you’re a customer of a utility,
    it’s probably the name of the utility
    that you send a bill to every month.
    These are, this is Excel Energy in Colorado and Minnesota
    or Georgia Power in the state of Georgia
    or Pacific Gas and Electric, PG&E in California,
    Dominion in Virginia, these kinds of entities
    that are under the way the United States operates
    these things, they’re essentially regulated monopolies.
    So they have a natural monopoly, right?
    They run the wires.
    You’re not gonna have two companies
    running wires to your house to compete.
    So if you have blackouts, it’s their problem, right?
    They’re their operator,
    they’re responsible for it fundamentally,
    and they have to keep costs under control, right?
    It’s gotta be safe.
    And increasingly, it has to be decarbonized.
    And so this is sort of the challenge
    of the last 10 years of the utility industry
    is to figure out how to solve all of that
    and now add on top of it, load growth,
    which is another new challenge, relatively new challenge
    that the industry is facing,
    which it hasn’t had to face for the last 20 or 30 years,
    right, load growth, right?
    The amount of new demand for electricity
    has been flat for the last 20 or 30 years.
    Before that, it did grow very quickly.
    We electrified the whole country in the United States
    basically from zero, not basically from zero in the 1920s,
    all the way to sort of the 1970s,
    there was very quick load growth
    and then sort of, you know, evened off.
    So we have built a lot of electricity
    sort of system capacity historically,
    but we haven’t had to do that for the last 23 years.
    So load growth on top is a challenge
    that maybe the electric industry is not used to meeting.
    It’s something that they did mean in the past,
    but it’s a brand new challenge.
    And you mix it in with these other ones
    of reliability and cost and decarbonization.
    And now it’s just, you know,
    an even more complex set of challenges
    that the utility needs to solve.
    And into that mix, we’re introducing a new asset,
    a new resource, right, a new tool, if you will,
    for them to solve all these problems simultaneously.
    – Yeah, I mean, this idea of energy consumption going up
    and then being flat, and it’s just about to tick up again,
    which I just find fascinating.
    It seems like it’s just because of AI.
    I did a little bit of research on this
    in the past couple of weeks
    and just sort of looked at per capita energy consumption
    over the past 200 years, basically.
    And it more or less is an exponential curve.
    I mean, this is per capita.
    It’s not that we have more people on earth.
    People are consuming more energy.
    Is that just going to continue into eternity?
    Are humans just on a per capita basis
    going to consume more and more and more?
    – That’s a great question.
    And part of the question is,
    is that consumption being enabled by low costs, right?
    You know, these things go hand in hand, right?
    So if you build the highways wider,
    do more people just show up, right?
    ‘Cause they want to use the resource.
    But all of human, like modern human civilization
    is based on low cost, abundant energy.
    That’s sort of a fundamental of the civilization
    that we live in today.
    And where that energy comes from, the mix of it
    has shifted over the last 200 years.
    So initially, of course, that energy was wood.
    We literally burned through forests of Europe
    that are just now essentially growing back in many ways.
    And so we started to do fuel switching.
    So we went from wood to coal,
    and then from coal to more hydropower,
    and then ultimately to other sources of hydrocarbons.
    And we’ve been reliant on the hydrocarbons
    for the last 100 years,
    maybe mixing in some nuclear in there fairly recently.
    And then now we’re pulling in more renewables.
    So you do see a fuel switching and the numbers going up
    because costs continue to go down, right?
    That is a feature of the energy in the industry
    more broadly is that despite all of that growth,
    despite all of that demand costs, in fact,
    continue to go down on a real basis.
    We’ll be right back.
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    We’re back with First Time Founders.
    I’d love to get an understanding
    for how you arrived here,
    and that is at Iron Air Battery Manufacturing,
    one of the leading renewable energy storage
    people in the world.
    Just a little bit of your background.
    You grew up in Salinas, California.
    You went on to Harvard for undergrad.
    You studied economics.
    Then you made what I would consider
    a very rare move in the world of tech,
    which is you went to divinity school.
    You went to Yale and you were studying
    to become a theologian and from my understanding,
    you wanted to be a priest.
    Tell us about your childhood
    and especially about that decision
    to go to divinity school,
    and perhaps how that may have translated
    into your career in renewables.
    – Yeah, so the town of Salinas,
    where I grew up in California,
    it’s an agricultural community.
    So we go to lettuce, essentially.
    That’s the primary good there.
    And that community was totally transformed
    when they figured out how to ship lettuce
    from the west coast to the east coast.
    In other words, refrigerated car,
    or you wanna think about it, storage, right?
    Energy storage.
    And my parents were for public servants,
    my dad a lawyer for farm workers,
    my mom a teacher at public schools
    for children of farm workers, essentially.
    And so I saw also sort of the energy nexus, right?
    The way that having access to low-cost energy
    and that being a fundamental building block
    of civilization,
    how that intersects advantaged and disadvantaged communities
    in some very important ways.
    And so that has always been sort of a feature
    of my thinking in general,
    and went to Harvard and I studied energy economics largely.
    And then I actually worked in the tech industry
    for a few years after that.
    This was the very first tech boom in Boston
    in late ’90s, early 2000s,
    and was largely disaffected with what I saw in that industry.
    It seemed like it couldn’t be real,
    and indeed that was the case.
    And so I had a hunger to work on what I felt
    to be more meaningful topics vocationally, professionally.
    I like to work, I like to work hard.
    I want that to mean something.
    And so I also take my fifth seriously,
    and I wanted to pursue sort of the intellectual aspects
    of that and was open to becoming a ordained priest,
    but found out very early on,
    thanks to the curriculum at Yale,
    that I’m wholly unfit to be a priest.
    That should not be my job.
    And so once I realized that that was just not gonna be
    my vocation, I took those same skills
    and tried to apply them to figure out
    what did I want to do?
    And energy, sort of having been a lifelong fascination
    for me, I really sort of wanted to pursue that.
    Now that’s a very broad topic,
    and so I started to just do a lot of research,
    and a lot of connections was one
    of the wonderful parts of Harvard.
    They used to have a book that you could literally open
    and call people, alumni that were willing.
    They were in the field of energy
    that they were willing to take a call from.
    – The manual LinkedIn.
    – Exactly, I had to physically go to an office
    to take down numbers and started to sort of piece together
    a thesis, if you will, about what the energy landscape
    was gonna look like, and even then,
    you could see costs coming down on wind and solar.
    They were very high compared to where they are today,
    but the trend was definitely pointing
    in the right direction and steep, right, steep down.
    And so I sort of made a sector bet.
    I basically just bet vocationally
    that it would be an interesting field,
    and it felt very relevant and needed
    to have compelling types of energy storage
    to take those renewable resources
    that were coming down and cost so quickly.
    Basically, I just said to myself,
    I bet at some point batteries
    will become relevant on the grid, and that’s what I did.
    So I went to a company straight out of Divinity School
    and we picked up my master’s in theology
    and went to go work for a battery company,
    and then that was in New York,
    and then a few years after that,
    I ended up at Tesla in 2009,
    where I started what became the Tesla energy effort,
    taking the lithium ion batteries out of the car,
    and really, for the first time,
    putting them on the electric grid.
    – You worked closely with JB Straubel,
    who was the co-founder of Tesla,
    I believe you were working with Elon Musk too.
    What were some of the learnings
    from being on that rocket ship?
    I mean, it sounds like,
    I love you say you made the sector bet.
    We often talk in this podcast about
    riding the right wave,
    picking the wave and then just riding through it.
    You did that with that sector,
    and you also did that with a company.
    You went from a smallish startup
    to one of the largest and most influential companies
    in the world.
    What was that experience like?
    – Well, at the time in 2009,
    it was definitely not one of the learnings,
    in a most influential,
    in fact, there was a Tesla death watch, right?
    There was this website that was trying to predict
    exactly when Tesla would fail,
    because so many people were sure it was gonna fail.
    So absolutely, it was a different moment for the company
    and for the electric vehicle movement in general.
    But it was, I could not think of a better place to go.
    It was also that Tesla was like a shining light.
    For folks who really wanted to work
    on the hardest, most impactful problems,
    Tesla just was like,
    it was like moths to a flame for that place.
    And so, Elon rightly deserves a lot of credit
    for the vision that he set and the ambition of his goals,
    which were just completely inspiring.
    And the quality of the people that ended up showing up
    is unparalleled, just spectacular.
    And so, I got to work with JB
    and I got to work with Elon and a bunch of other colleagues,
    Drew, Beck Lino, and I could list many, many names there.
    And some of the key learnings were go after hard problems,
    you’ll get the best people to work on them, right?
    It’s a little counterintuitive.
    Like great people don’t want to work on mediocre challenges.
    They want to work on hard problems.
    They want to work on, in fact, the hardest problems.
    And if you pick the right ones
    and you set ambitious goals,
    in some ways you end up with a self-fulfilling prophecy
    on that in terms of the type of talent
    you can bring into the company.
    Now, getting high quality folks into the company
    that’s step one, you’ve got to continue to motivate them
    and drive them in the right way and everything else.
    But absolutely, I saw that play out
    to the company’s benefit time and time again
    in those early days of Tesla.
    As we went, from my time there,
    from about 300 to 30,000 people, it was quite the sweep.
    So that was certainly a key learning.
    Go after the big stuff that matters, why not?
    – But it wasn’t enough to keep you.
    And then eventually you started your own company.
    Why did you decide to do that?
    – Well, as much as I saw that Lithium-Ine
    very clearly back in 2009 when I joined Tesla
    was going to be the next thing to come into the grid
    in a meaningful way and have a big impact.
    It also became clear over my time there
    that Lithium-Ine was not the end all,
    be all for energy storage on the grid.
    And that was increasingly clear
    as I talked to utility executives
    while I was building up the Tesla energy business there.
    They would describe these other challenges
    that Lithium-Ine was just not gonna be able to meet.
    Additionally, seven and a half years roughly
    is enough time for me to spend at Tesla.
    That’s a, you may have heard, it’s an intense place to work.
    And so I love to work hard.
    I love to work on what I feel matters.
    And I’m also married and I got three kids.
    And that was, I want to stay married
    and be my kid’s life in the right way.
    And so for me, that was enough.
    And it was enough for me that it was enough.
    I didn’t have to keep staying there.
    And I also wanted to leave on good terms.
    Everybody has a time at which it’s time
    for them to leave Tesla.
    And I saw a moment and I just said,
    now’s a good time, right?
    I did exactly what I wanted to do.
    I started the Tesla energy effort and got it stood up.
    And I’m super proud of the business that is today
    and the role that I played early on.
    It’s a great business.
    And there were more things I still wanted to do,
    specifically for energy storage,
    precisely because I made a sector bet, not a company bet.
    And so I saw more runway there and more opportunity
    and frankly, more fun to go back to an earlier stage
    and start something.
    And I didn’t know that at the time when I left Tesla,
    but that’s very quickly where my brain went to
    ’cause I’ve been in the industry 20 years now.
    It turns out I’m not very good at thinking about much else
    other than energy storage for the electric grid.
    So it was sort of a natural inevitability, I suppose.
    And I also should say that I had never founded anything
    when I became a co-founder of Form and before.
    I had started a company just on my own
    that ended up merging to become Form.
    But at the same time, I was 40 years old,
    I also knew exactly what needed to be done.
    And so, I had zero doubt.
    I needed some encouragement from close friends
    and more importantly, my wife to take that step.
    You do have to sort of take that very first step
    and say I’m gonna be a founder on something,
    do the incorporation and push a board,
    make the mental commitment to go do that.
    But I also had, once I did take that step with that support,
    I also knew exactly what needed to be done.
    And I still feel that way.
    I see very clearly the path in front of the company.
    And that’s because I’ve been doing this for a long time
    and I’ve seen good, I’ve seen bad,
    I’ve seen different ways to do things.
    And I think I’ve got a pretty good sense now
    for what works, not just for the industry,
    how to go build a business, energy storage specifically,
    but also for how to build an organization.
    – You mentioned that you were a co-founder
    and that the company merged.
    It’s a very interesting story.
    I mean, the original company you created
    was a different company called Verse Energy.
    And then you ended up combining it
    with what I would call a competitor.
    I mean, it was this research team out of MIT,
    headed by this guy, Yetmit Chang,
    who’s now your chief science officer.
    I believe his whole team is pretty much
    on your founding team.
    Why did you decide to combine with someone else,
    specifically someone who was working on the same problems
    and thus competing with you?
    – Yeah, this was maybe a benefit of the age
    that I was when I started it.
    At some point, you realize that sublimating the ego
    is in your own benefit.
    And I’d been before Tesla,
    I’d been at a failed battery company.
    We basically didn’t do anything after working hard
    for almost five years at that entity.
    And I wanted to make sure we gave ourselves
    every possible chance to succeed.
    And that included having multiple technical shots on goal
    and having people around the table
    from the very beginning
    that had been through this before.
    And so not just yet,
    but my other co-founders, Marco, Ted and Billy,
    we’ve all been in batteries before.
    This was nobody’s first time around the block.
    And so having the collected decades of knowledge
    and wisdom and hard earned scars
    was just too compelling to pass up.
    And we had more than one technical shot on goal.
    I had identified iron arrow on my own,
    but we didn’t know at the time
    that that was gonna succeed at all, right?
    And so in the world, starting at this stage
    that we did of novel R&D
    and early stage commercialization,
    inevitably there are several cars that you turn over
    that’s either say, says, or it’s zeros.
    And we’re lucky enough that on iron air,
    we turned over enough of those early on to say,
    yeah, this is the one that’s gonna be,
    but you just never know.
    As a friend of mine says,
    sometimes the universe works the way that you want it to,
    but you don’t know that going in, right?
    And so bringing five co-founders,
    which is an unusually large number of co-founders
    made complete sense to us at the time
    because we all got along very well, it turns out.
    And we’re all still in the company.
    We’re all still pulling hard on the company.
    It’s now a huge advantage.
    We’re 750 people and we have five founders
    throughout all parts of the company
    that represent the founder mentality
    that are completely committed to the success of this company.
    And so I can’t imagine doing it any other way,
    being a sole founder in this kind of enterprise.
    It’s just, it’s really, really hard.
    None of it has been easy.
    We’ve benefited from a ton of really hard work
    and super smart people and some luck along the way.
    None of it easy or given, frankly.
    And so any company is sort of imprinted by its founders.
    And I can’t imagine a better set of four co-founders
    to be with on this journey from the very beginning.
    – Yeah, I’ve heard you say elsewhere
    that you don’t consider yourself
    one of these kind of charismatic salesman visionary,
    what I would call, say like an Elon Musk, Steve Jobs type.
    And I personally, I find that refreshing
    and the way that you describe it,
    it sounds like from the very beginning,
    what you’ve been leaning on is your expertise.
    I mean, from your entire career in the industry
    plus teaming up with four other experts in this.
    I like it because I feel like there’s just,
    there are a lot of leaders in tech right now
    who I would say lean on the vision
    which can kind of delve into blind confidence.
    Which I think we have enough of.
    So I’m just interested as a leader,
    who do you look up to?
    What, who are sort of some of your leaders
    that are your role models?
    Who do you try to model your behavior off of as a manager?
    – Well, first of all, I heartily agree with your sentiment
    that we over index to sort of the megafauna CEO founder type.
    And I think that there’s just too many other styles
    of effective leadership to over index on just one.
    And so the one that I bring to the table
    is perhaps a little bit more understated to be clear.
    What I don’t compromise on is standard of excellence
    that we have internally.
    And you can drive that in a lot of different ways
    to be clear.
    And it doesn’t have to be, again,
    sort of this megafauna type personality
    that’s just hammering people from the down.
    We hold each other to very rigorous standards.
    And if there’s one sort of management approach
    that I take first and foremost,
    it’s a very immodest hoarding of talent.
    I will completely admit to that.
    You need to go after the absolute best people
    for absolutely everything you possibly can.
    And then hold them accountable, right?
    Set the right vision and hold them accountable.
    But I also am not a micromanager,
    much less as Elon would say, a nanomanager.
    I really do want to hire those great people
    and then empower them to go do their best possible work.
    That understated style comes from my parents,
    to be perfectly honest.
    I saw them be leaders in their respective fields
    using that approach.
    And so there perhaps is also an echo,
    just a little bit of one,
    from the vocation of people who are ordained
    in the ministry, in other words,
    how do you lead a group with humility,
    but still with vision, right?
    And still with the driving force.
    We’ll be right back.
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    We’re back with first time founders.
    When we last spoke, there was this one line
    that you mentioned to me, which I love,
    which you said sort of guides you.
    It’s this passage from Proverbs, quote,
    “People will perish for lack of vision.”
    What does that mean to you?
    You know, it’s a stark reminder.
    That was written at a time
    when people were living in the desert.
    And literally, if they didn’t all agree on the vision,
    they would die, right?
    And the imperative of a clear vision
    is as relevant for the group
    of the 750 people inside of form
    as it was for the people, the Hebrew people
    that first wrote that down.
    And the company will go away.
    It will perish if we don’t have the right vision.
    People can go take different jobs.
    People can go decide to do something
    different with their life.
    And if we don’t give them the right vision
    and let them know today why they’re working on the thing
    that they’re working on
    and why it matters in a broader context,
    the company will perish.
    It’s as simple as that.
    And so it’s a stark reminder
    of sort of the existential requirement, in fact,
    especially if you’re starting something brand new
    from scratch, creating a category inside of an industry
    that’s relatively nascent, right?
    Not to mention a company doing something new
    to provide that vision
    and to be very clear about why we’re here
    and why this group of humans gets together
    on a regular basis.
    In fact, on a daily basis to work on a common goal.
    It’s also a reminder to be humble
    in service of that vision, right?
    It is not about me.
    It’s not about the management team.
    It’s about the vision that we’re setting as a company
    and the impact that we hope to go have.
    It almost goes beyond just the company
    because one thing we haven’t mentioned yet is climate.
    And, you know, this was one of the main reasons
    I assume that you started this.
    I mean, much of the upside in your company
    is that it will address climate change.
    I and our batteries are a way to store energy
    without relying on fossil fuels.
    And the data is just getting bad and scary.
    I mean, one start I pulled here
    is that NASA confirmed that 2023 was the warmest year ever.
    So, to what extent is the existential threat of climate
    also a motivating factor?
    In addition to the possibility that your company
    as with any company could perish if sales drop off.
    – Yeah, that’s a different sort of level
    of thinking about perishing, that’s for sure.
    But it’s a huge motivator to be clear
    and it’s also tied to something I said earlier
    which is that cheap abundant energy
    underpins human civilization broadly speaking today.
    And that fact is not going away.
    And so we need to figure out how we will drive
    the energy industry forward in a way that solves
    for everybody, right, in the end.
    And yes, it absolutely means meeting the climate challenges
    that we have and the decarbonization challenges
    that we have and still providing reliable
    low cost abundant energy, no matter what.
    And that is not a switch we can flip overnight.
    It’s not, nobody has a wand to sort of make things better
    immediately, it will take innovation
    and it will take innovation at scale
    and it will take massive amounts of capital.
    I don’t know if you saw this, but roughly
    between a hundred and 150 trillion dollars of capital
    will go into this broad change that will happen
    over the next 40 or 50 years.
    It’s a little incredible, like literally incredible, right?
    It’s hard to imagine.
    And so we need to be able to meet the scale
    of that challenge in a lot of different ways.
    And absolutely we see that this kind of storage
    can be a critical tool to enabling that change to happen
    in a way that solves for a lot of people,
    meets the climate goals, meets the energy goals,
    meets the reliability goals, right,
    that we have for this stuff.
    And so it’s a huge motivating factor
    in the broader context of just the scope
    and scale of this industry, this energy industry
    and within that the electricity industry
    that we happen to work on.
    – If there’s one thing that you think
    regular people should know about
    the state of our climate today.
    I mean, I just mentioned last year was very warm,
    but I feel like these stats often don’t ring true for people.
    I think it’s hard to feel that impending doom.
    And I think there’s a lot of psychological research
    on that issue, but if there’s one thing
    you think people should know about climate today
    and where we’re at right now, what would it be?
    – Well, I guess I’ll say two things.
    One, the volatility of the weather is also increasing.
    So that if you look at the incidents,
    this is from the NOAA, the National Oceanic
    and Administrative Entity that tracks these things.
    If you look at the number of multi-day,
    highly volatile weather events that are driving
    essentially dollars of damage in the United States,
    they’re going up pretty significantly.
    They don’t have a pithy stat to sort of give to you,
    but I’ve seen the chart and it’s definitely open
    to the right there.
    That’s important to keep in mind.
    A changing climate, it means a lot of things.
    However, we experience it as weather in the end, right?
    And that weather will be more volatile for us.
    We’ll have to sort of think about that.
    And specifically for a lot of people,
    it means water volatility, either too much or too little.
    And what that means to civilization is quite important.
    Now, the other part of that is,
    it’s important to have a sense of agency in this
    because sometimes $150 billion or two degrees Celsius
    or any of these other things,
    they’re sort of so abstract as to be unrelatable.
    And I think it’s important to understand
    the scope of the challenge.
    It seems really, really big.
    And remember that humans,
    whenever we decide to do something,
    we pretty much do it collectively.
    Look at every sort of energy transition age
    that we’ve been through.
    I mentioned the fuel substitution.
    That has happened.
    We have done it.
    We have been in periods before when we said
    surely we’re gonna run out of energy.
    Surely we can’t keep going in this way.
    And you run the numbers in a linear fashion
    and that’s all true.
    And innovation steps in.
    And human will to succeed steps in.
    And we’ve seen that pattern over and over and over again.
    And so I have a ton of faith based on the evidence
    that I see that that will continue to be true
    and that we collectively as a civilization
    will step up and meet the needs.
    And we’ll do that because people from all walks of life
    in all ways that they intersect energy broadly speaking
    will want that to be true.
    – If you had one piece of advice
    that you had to give to your former self
    when you were starting the company, what would it be?
    – Go do it.
    I really didn’t know that I was gonna start a company.
    And it took me some months to decide whether or not
    I mentioned good advice from friends
    and support from my wife that were critical to do it.
    And it has been harder than expected
    to be perfectly honest and more fulfilling at the same time.
    And I think you just really never know going into it
    what the journey is gonna look like.
    And sometimes you just still need that encouragement.
    And you sort of would like to ask your future self,
    is this gonna be worth it?
    And I think the answer unequivocally is yes,
    and in different ways than you expect, right?
    So go do it.
    It’s not that much risk in the end, right?
    I think collectively people are probably too risk-averse,
    especially when it comes to their vocations.
    I’m fortunate I come from a stable family
    and they always support me and love me.
    But even still, I think professionally,
    people take far too few risks.
    – Matteo Haramio is the founder and CEO of Form Energy.
    Matteo, I would love to talk for hours more,
    but I know you need to go build some iron-air batteries.
    So we’ll let you go.
    – Thanks very much, Eddie.
    It was great to chat.
    (upbeat music)
    – Our producer is Claire Miller.
    Our associate producer is Allison Weiss.
    And our engineer is Benjamin Spencer.
    Jason Stavars and Catherine Dillon
    are our executive producers.
    Thank you for listening to First Time Founders
    from the Vox Media Podcast Network.
    Tune in tomorrow for Procure Markets.
    (upbeat music)
    (upbeat music)
    (upbeat music)
    (upbeat music)

    Ed speaks with Mateo Jaramillo, Co-Founder and CEO of Form Energy, an energy storage and manufacturing company. They discuss how his experience at divinity school led him to start the company, what his experience working at Tesla was like, and why innovation in energy storage is so imperative to help save the planet.

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