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0:00:42 Today’s number 1493.
0:00:47 That’s the year Christopher Columbus landed
0:00:48 on the island of St. Bart’s
0:00:50 and named it after his brother Bartolomeo, true story.
0:00:55 My wife said to me, you know,
0:00:57 sex is so much better on vacation.
0:01:00 And I thought, that’s not the postcard I wanted.
0:01:03 (laughs)
0:01:04 (upbeat music)
0:01:06 Welcome to Prop G Markets.
0:01:16 Today we’re discussing London’s IPO market
0:01:20 and Mistral’s latest funding around.
0:01:22 But first, where are you Ed?
0:01:24 I’m in St. Bart’s, it’s pretty good.
0:01:26 It’s pretty nice out here.
0:01:28 Yeah, I got here yesterday.
0:01:30 You know, it’s all right.
0:01:31 We got the private villa
0:01:35 and it’s got a private pool
0:01:36 and it’s got, you know, there’s a private chef.
0:01:38 So we had breakfast in the morning.
0:01:40 Things are okay is what I’d say.
0:01:42 So first off, I’m the only one
0:01:43 that’s allowed to be cynical here.
0:01:45 How many of you are there in St. Bart’s right now?
0:01:47 How many from the Prop G media team went to St. Bart’s?
0:01:49 Six.
0:01:50 And you’re staying at my favorite place, Lacerano.
0:01:52 I even picked out the villa for you.
0:01:55 Where are you guys going to dinner tonight?
0:01:56 I’m not quite sure.
0:01:57 I think we’re going to…
0:01:58 Typical man.
0:01:59 You’ve leapt it up to the women
0:02:00 to handle everything, right?
0:02:01 That’s right.
0:02:02 I’m not sure.
0:02:03 Oh, there we go.
0:02:04 Love that sound.
0:02:06 You’re really leaning into this.
0:02:07 Good for you.
0:02:09 All right, you’re having a glass of champagne.
0:02:11 Good for you.
0:02:11 That’s right, yeah.
0:02:12 This is, you’re easing into the St. Bart lifestyle.
0:02:16 How are you doing?
0:02:17 You’re back at home?
0:02:18 Yeah, I’m in London.
0:02:20 My life is not nearly as romantic as yours.
0:02:23 It’s, although I’m going to the South of France tomorrow,
0:02:26 which I’m excited about.
0:02:27 That’s right.
0:02:27 You’re going to Cannes.
0:02:28 That’s right.
0:02:29 Going to Cannes.
0:02:30 Excited about that.
0:02:31 Although, I think I’ve lost some brand equity.
0:02:32 I can’t get invited to the iHeart party
0:02:37 at the Ducat with Lenny Kravitz.
0:02:38 I called, I sat next to the CEO of iHeart Media last year
0:02:43 and I emailed him and he kind of sent me a polite response,
0:02:47 but still I haven’t had that invite yet.
0:02:49 So I think I’ve lost some brand equity.
0:02:51 I don’t know what’s going on here.
0:02:52 I don’t, anyways, I can’t get into the hot parties anymore.
0:02:55 I did get invited to Spotify, but I’m not.
0:02:57 Is the iHeart party really that hot?
0:02:59 Lenny Kravitz is going to be there?
0:03:00 Yeah. Well, it’s at the Hotel Ducat
0:03:02 and I’m staying there and Lenny Kravitz is playing.
0:03:04 And so it’ll be like being a prisoner at Alcatraz
0:03:06 if I don’t get invited.
0:03:07 ‘Cause supposedly the prisoners of Alcatraz
0:03:09 when the wind was a certain way,
0:03:10 they could hear people parting in the wharf,
0:03:13 which was supposedly torturous for them
0:03:15 ’cause they got to hear what life was like
0:03:17 for people who are free.
0:03:19 So if I’m in my hotel room at the Hotel Ducat
0:03:21 and I hear, you know, I start hearing Lenny Kravitz
0:03:23 play his, you know, his three songs,
0:03:26 then I’m gonna be very upset.
0:03:28 I’m gonna stop listening to iHeart Radio.
0:03:31 Is that how you feel right now with us?
0:03:33 I mean, we’re having a pretty good time here.
0:03:34 No, I like you guys.
0:03:35 I want you to have fun.
0:03:36 And not like that.
0:03:37 I know that I like that everyone knows
0:03:39 that you’re down there.
0:03:40 I think it makes us seem.
0:03:41 By the way, in case you’re still wondering,
0:03:43 we’re still recruiting for a writer,
0:03:45 a senior writer for No Mercy, No Malice.
0:03:47 So if you want to go to St. Bart’s next year,
0:03:50 come join, come join Prop G.
0:03:53 Anyways, enough of that, get to the news.
0:03:55 Okay, let’s start with our weekly review of market vitals.
0:03:57 (upbeat music)
0:04:00 The S&P 500 closed about 5,400 for the first time ever.
0:04:08 The dollar was flat, Bitcoin declined
0:04:11 and the yield on tenure treasuries dropped,
0:04:13 shifting to the headlines.
0:04:15 The Consumer Price Index showed inflation
0:04:17 cooled again in May with prices up just 3.3%
0:04:20 from a year earlier.
0:04:21 That’s flat month of a month and down slightly from April.
0:04:24 Meanwhile, the Federal Reserve held interest rates steady,
0:04:26 though many Fed officials are expecting
0:04:28 at least one cut by the end of 2024.
0:04:30 Open AI hired the former CEO of Nextdoor
0:04:33 as its new chief financial officer.
0:04:35 As the company’s first CFO in two years,
0:04:37 Sarah Friar will help the company grow its global business
0:04:39 and invest in further AI research.
0:04:42 The company also hired the former SVP of product
0:04:44 Twitter Kevin Weil as its new chief product officer.
0:04:48 Oracle stock rose 13% to reach an all-time high
0:04:51 despite reporting fourth quarter earnings
0:04:53 that were below analyst expectations.
0:04:55 While the company missed slightly on revenue,
0:04:57 the stock surged on account of new deals
0:04:59 with Google Cloud, Microsoft Azure and Open AI.
0:05:01 And finally, Tesla shareholders voted again
0:05:04 on Elon Musk’s $56 billion pay package
0:05:06 and the move to reincorporate in Texas.
0:05:09 They’re actually voting right now as we record this podcast
0:05:11 so we don’t know the results yet,
0:05:13 but the stock rose 6% this morning
0:05:15 after Musk said he expects to win the vote.
0:05:18 Scott, your thoughts.
0:05:20 – I think it’s great that inflation cooled.
0:05:22 I’ve always, as someone who likes to think
0:05:24 they know a little bit about economic history,
0:05:25 inflation is more dangerous than invading army.
0:05:28 I mean, in last year, you know,
0:05:30 part of the village gets invaded,
0:05:31 but revolutions oftentimes can be reverse engineered
0:05:35 to inflation.
0:05:35 I look at what’s happened here in the UK
0:05:38 and basically they have inflation and lower productivity.
0:05:40 So let’s figure out a way to make less money
0:05:42 and have all of our goods go up in price,
0:05:44 which translates to, you know, a worse standard of living.
0:05:47 And that’s when every household gets angry
0:05:49 and wants chaos and change.
0:05:51 It’s the first time in almost two years
0:05:53 that the CPI didn’t climb.
0:05:55 The annual core rate of inflation came down to 3.4%
0:05:58 the lowest since April of 2021.
0:06:01 And the report keeps hopes
0:06:03 of a potential September rate cut alive.
0:06:05 I am sick of talking about rate cuts.
0:06:07 I just don’t care.
0:06:08 The open AI, you know, open AI seems to be
0:06:12 kind of professionalizing, if you will.
0:06:14 The former CEO before her position in next door,
0:06:17 Sarah Fryer served as CFO of Square
0:06:19 and previously worked at Goldman Sachs and McKinsey.
0:06:21 So she’s obviously very qualified.
0:06:23 And hiring Fryer potentially signals
0:06:25 that open AI could be thinking about an IPO.
0:06:28 She’s sort of the, she’s someone who comes in
0:06:31 who has credibility in the street and says,
0:06:32 “Okay, this is how you go public.”
0:06:33 And Sam, you know, do not talk about X, Y and Z,
0:06:36 do not talk about this and can kind of,
0:06:38 that those skills are very important
0:06:41 and the difference between a well-managed IPO
0:06:43 for this company would be tens of billions of dollars
0:06:45 in market capitalization.
0:06:46 And so she is going to make a shit ton of money.
0:06:49 She’ll be there just in time to get a shit ton of options
0:06:52 before they go public.
0:06:53 So this, they literally had their pick of anybody
0:06:57 to be the CFO of this company.
0:06:58 – By the way, do you see how much money
0:06:59 they’re generating now?
0:07:01 The information just reported on this.
0:07:02 Sam Altman revealed the revenue,
0:07:04 the ARR for the company.
0:07:06 Do you see this?
0:07:07 – I did, what did it say?
0:07:07 – $3.5 billion a year is their run rate right now,
0:07:11 which is more than double
0:07:12 than what they were at six months ago.
0:07:14 And just to put that into perspective,
0:07:16 Anthropic, which is arguably their number one competitor,
0:07:20 they’re at 100 million and then cohere is at 22 million.
0:07:23 So it’s like 100 million, 22 million versus 3.5 billion.
0:07:28 The open AI business is 35 times larger
0:07:31 than their next biggest rival.
0:07:33 Like they’re just completely running away
0:07:35 with it at this point.
0:07:35 – Probably the more impressive thing is who said
0:07:37 they’ve grown their revenues doubled
0:07:39 in the last six months.
0:07:40 – Right.
0:07:41 – Yeah, that’s pretty impressive.
0:07:43 Now the question is what was the last round of funding?
0:07:45 I’d be curious to see what the multiple revenues
0:07:47 in terms of valuation.
0:07:49 – Yeah, I mean, I think it was the $86 billion,
0:07:51 but that’s still, that would still put them
0:07:53 on the low end compared to all of these,
0:07:55 all of these other ridiculous AI startups.
0:07:57 So, I mean, they’ll probably have another round soon.
0:07:59 – I would agree.
0:08:00 I would bet that that if it’s three and a half billion
0:08:03 that was at 80, what is that about a 25 times revenues?
0:08:06 That’s actually cheap for the AI sector.
0:08:08 And you’re right, they seem to be running away with it.
0:08:11 It’s interesting ’cause all of the noise
0:08:12 around how dysfunctional it is and board members leaving
0:08:15 and Sam, you know, using Scarja’s voice,
0:08:20 it’s all noise, it’s not news.
0:08:22 The real news is the things you’re focusing on
0:08:24 and that is their revenues and what’s going on there.
0:08:27 But good for them, it does sound,
0:08:28 that’s an observation I hadn’t even thought of.
0:08:30 They’re clearly putting on their best dress for an IPO.
0:08:34 Oracle, it’s really interesting.
0:08:36 Larry Ellison deserves a lot of credit here
0:08:38 because there’s a bunch of companies
0:08:40 that are kind of getting hit hard
0:08:42 for not making the transition to AI.
0:08:44 I think Salesforce has seen as someone
0:08:47 who hasn’t made that transition,
0:08:48 although their stock has done fairly well
0:08:50 and it’s a great company.
0:08:52 I don’t know if IBM is like that,
0:08:54 but Oracle has positioned themselves as,
0:08:57 hey, don’t forget about us and they have made
0:09:00 real big investments here.
0:09:02 By the way, Oracle is in my 401k, so I’m rich.
0:09:06 Now you’re rich.
0:09:07 Finally, there are shares of 13%,
0:09:11 that’s the biggest single day increase
0:09:12 since December of 2021.
0:09:14 People are excited about their partnership with Google,
0:09:17 which will make its database available on Google Cloud.
0:09:20 It’s their second big deal in terms of AI.
0:09:22 The company signed a similar agreement with Microsoft
0:09:24 in 2023 and the company also reported
0:09:27 strong revenue guidance and they’ve signed
0:09:28 more than 30 AI sales contracts,
0:09:31 worth more than $12.5 billion.
0:09:33 So Oracle and Dell have both positioned themselves
0:09:36 in the front of the AI wave.
0:09:37 They’ve done a great job showing that elephants can dance,
0:09:40 if you will.
0:09:41 Another legacy tech company such as IBM and Cisco
0:09:43 have not made that transition.
0:09:45 If you look at total stock returns from 2020 to 2022,
0:09:48 Oracle has a 59% return, Dell’s 55, IBM 26.
0:09:53 Cisco’s only 7%, so it’s underperformed the market.
0:09:56 It’s just pretty impressive what they’ve been able to pull off.
0:10:00 I think Larry Ellison is gonna go down
0:10:01 as one of the more measured success stories in tech.
0:10:04 – Don’t you think what they’re doing right though
0:10:06 is kind of just their storytelling?
0:10:08 I mean, I feel like this is just more evidence
0:10:11 that the Wall Street is basically refusing to listen
0:10:14 to anything that doesn’t have the word AI in it.
0:10:17 Because you look at these earnings,
0:10:18 these were pretty bad earnings.
0:10:20 Like they missed on the top line,
0:10:22 they missed on the bottom line,
0:10:23 they had a 7% revenue growth, like it’s not a good quarter,
0:10:27 but it’s this story about AI that they’ve told
0:10:30 and about the potential pipeline of future AI contracts.
0:10:34 They got everyone so excited
0:10:36 and it basically made all of the other numbers irrelevant.
0:10:38 And then you compare that to Salesforce,
0:10:40 which you brought up and which we discussed a few weeks ago,
0:10:44 they had higher than expected earnings on the bottom line.
0:10:47 They had 11% revenue growth.
0:10:49 It’s significantly higher than Oracle.
0:10:52 But at the same time,
0:10:53 they had a pretty weak AI story
0:10:55 and they just didn’t convince Wall Street
0:10:57 that they’re gonna be on the front lines
0:10:59 with Microsoft, with Nvidia, with the Google.
0:11:01 And what do you know, the stock fell nearly 20%.
0:11:03 So it feels like Wall Street
0:11:06 is kind of sending us a message here,
0:11:08 which is we only care about AI.
0:11:10 – I think that’s really insightful Ed,
0:11:11 because just as you said it,
0:11:13 it struck me that what I would wanna know is that,
0:11:15 so supposedly Oracle has signed 30 AI sales contracts
0:11:18 worth more than 12 and a half billion.
0:11:20 I’d wanna know the complexion of those contracts.
0:11:22 And that is if they just signed up
0:11:24 30 new database contracts,
0:11:26 similar to what they always sign up,
0:11:27 but they’re calling it AI.
0:11:29 I mean, we’d hope that analysts would have something called,
0:11:33 I’d love to produce this, an AI washing index.
0:11:36 And that is everyone’s claiming
0:11:38 that all the revenue now is coming from AI
0:11:39 just because, all right, they, you know, whatever it is,
0:11:43 it has an AI component to it.
0:11:45 And so there is trying to separate
0:11:49 the weed from the chap here or the bullshit
0:11:51 from, you know, the just kind of ball, if you will.
0:11:55 But it all distills down to the same thing.
0:11:59 And that is the core competence in terms of a CEO
0:12:01 is the same core competence you would hope for your kids
0:12:03 and that you wanna inculcate into your children.
0:12:06 And that is not an understanding of accounting.
0:12:08 It’s not leadership skills or ethics or sustainability
0:12:12 or whatever bullshit we can come up with
0:12:13 to try and get people high-paying positions in universities
0:12:16 so they have no accountability.
0:12:18 It’s storytelling.
0:12:21 And that is when I read that investor letter
0:12:23 from 1997 by Jeff Bezos, I thought, I wanna buy stock.
0:12:27 When I hear Ted Sarandos or Reed Hastings speak,
0:12:30 I think I wanna buy stock.
0:12:32 These guys just have an ability to get on an earnings call
0:12:35 and be very straightforward and yet visionary at the same time
0:12:39 and just instill so much confidence or anything, you know?
0:12:42 I’m not sure I even understood what he’s saying,
0:12:44 but I just wanna buy stock.
0:12:46 The way he used to work was, okay, you’re in tech hardware.
0:12:49 You’re in mainframe computing.
0:12:50 Those companies trade between 12 and 14 times EBITDA.
0:12:54 And if we like Bob more than Lisa, Bob gets 14, Lisa gets 12.
0:12:59 And then things just went fucking haywire.
0:13:01 And it seemed like a lot of companies
0:13:02 that were sort of when you really peeled back the curtain
0:13:05 were pretty similar, but one told a much better story.
0:13:08 So storytelling has become really the core competence
0:13:11 for growth firms because their ability
0:13:14 to get the markets excited about what they’re doing,
0:13:15 such that they could pull forward, cheap capital,
0:13:17 reinvest more capital than their peers,
0:13:20 such that they could pull the future forward
0:13:21 and run away with it, see above Amazon and Netflix,
0:13:24 has become the core competence.
0:13:26 So there’s gotta be at some point,
0:13:29 someone’s ability to go, what’s real and what isn’t.
0:13:31 And then the retort to that would be,
0:13:33 well, storytelling is real.
0:13:34 And if you can raise cheap capital,
0:13:36 if you can raise capital cheap and then you’re a competitor,
0:13:38 you can pull the future forward and make the promise,
0:13:41 turn the promise into performance.
0:13:43 But to your point, it sounds like people
0:13:46 who teach communications or investor relations
0:13:48 should probably look pretty closely
0:13:50 at the sales force and the Oracle earnings calls
0:13:53 and say what went right and what went wrong.
0:13:56 – Should we discuss this Tesla shell to vote?
0:13:59 – Yeah, I guess we’re recording on a Thursday.
0:14:02 It’s Thursday at 6.30 here.
0:14:03 Only ’cause I’m planning to go to Maison Estelle tonight
0:14:05 and get fucked up.
0:14:07 – So I’m watching the clock.
0:14:09 My understanding is that both of these things
0:14:11 are gonna pass, that the shareholders
0:14:12 are going to approve them, is that correct?
0:14:15 Is that what you’ve heard so far today?
0:14:17 – That’s what Elon’s been saying.
0:14:19 – Okay, but does anyone know if it’s true?
0:14:21 – Yeah, I believe him on this one.
0:14:22 I think it would be a weird thing to lie about.
0:14:24 He’d look very stupid and we’ll know by the end of the day.
0:14:27 By the time this podcast comes out,
0:14:30 the vote will be in.
0:14:31 – So look, the shareholders get to decide.
0:14:34 It’s been a bit of a soap opera.
0:14:36 I’m only slightly less sick about talking about this
0:14:39 unless we wanna talk about Paramount.
0:14:42 – Christ, make it go away.
0:14:44 – I just want them to get on with it.
0:14:46 – Yeah, I think, I mean,
0:14:49 I can’t say anything with certainty how the vote will go.
0:14:52 I think what I can say with certainty
0:14:55 is that whether or not it’s yes or no,
0:14:57 this vote is basically meaningless
0:15:01 because here’s what’ll happen if the vote is approved.
0:15:04 It’ll go back to the Delaware Court of Chancery.
0:15:07 It’ll go back to Chancellor McCormick
0:15:09 who will open up that briefing.
0:15:11 And she’s gonna be like,
0:15:13 hold on, I adjudicated this case before.
0:15:15 Actually, I looked at this case basically two months ago
0:15:19 and I made my decision very clear.
0:15:21 The answer is no.
0:15:23 And I feel like what Tesla is forgetting
0:15:27 is that if you read her opinion,
0:15:29 she actually didn’t care whether the shareholders
0:15:31 were fully informed or not.
0:15:32 And granted, she said they probably weren’t,
0:15:34 but it had actually no bearing on her actual decision.
0:15:38 She believed that the package was inequitable
0:15:42 and that as a court of equity,
0:15:44 she also believed that she had the power to rescind it.
0:15:47 And that was it.
0:15:49 And now here we are again
0:15:50 and we’ve got the same case on her desk.
0:15:53 So nothing’s gonna change here.
0:15:55 And we discussed this with my uncle,
0:15:57 Charles Elson, a few weeks ago.
0:15:59 And he said the same thing.
0:16:00 He’s like, this isn’t about informed versus uninformed.
0:16:03 This is just about, was it equitable or was it inequitable?
0:16:07 And she’s already decided it’s the latter.
0:16:09 So they can appeal the decision, that might go somewhere.
0:16:13 But this vote, this being their argument,
0:16:16 oh no, we looked at it again
0:16:17 and we still think it’s equitable.
0:16:19 It’s just a non-starter.
0:16:20 For her, for Charles and McCormick,
0:16:22 I just don’t think this is gonna go anywhere.
0:16:25 We’ll be right back after the break
0:16:27 with a look at a new IPO in London.
0:16:30 (upbeat music)
0:16:32 – Support for the show comes from Atlassian.
0:16:42 Ah, the org chart, that top to bottom list
0:16:45 of who works for who, but really,
0:16:46 aren’t you working for the customer?
0:16:48 So maybe the real question is, who am I working with?
0:16:51 Atlassian wants to make sure
0:16:52 that your organization is working together
0:16:54 with the same shared language
0:16:55 and goals across all departments.
0:16:57 Atlassian software, including Loom,
0:16:59 provides instant asynchronous video communication
0:17:02 across teams, while Atlassian Confluence
0:17:04 helps connect teams with a single source of truth.
0:17:07 And Atlassian Jira helps teams plan, track,
0:17:10 and deliver shared work.
0:17:11 Whether you’re a team of two, 200, or two million,
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0:17:34 Learn how to unleash the potential of your team
0:17:36 at Atlassian.com, that’s A-T-L-A-S-S-I-A-N.com.
0:17:41 Atlassian.
0:17:43 – We’re back with ProfG Markets.
0:17:55 The London stock exchange got a boost last week
0:17:57 from a surprising new entrant, Raspberry Pi.
0:18:00 Raspberry Pi makes low cost computers
0:18:02 that are about the size of a credit card.
0:18:04 They run an open source operating system,
0:18:06 and for more than a decade, hobbyists have customized them
0:18:09 for things like streaming media, hosting servers,
0:18:12 and learning to code.
0:18:13 They’re also used in manufacturing
0:18:15 for things like inventory management
0:18:16 or production line automation.
0:18:18 Today, the industrial market makes up more than 70%
0:18:21 of the company’s sales.
0:18:22 At its pricing, Raspberry Pi was valued
0:18:25 at about £542 million, or nearly $700 million,
0:18:29 and shares soared 38% on the first day of trading.
0:18:34 So Scott, we recently discussed
0:18:36 how the London stock exchange has been struggling
0:18:39 to attract IPOs, specifically tech IPOs,
0:18:41 but it’s attracted this company,
0:18:44 and Sheehan, which we’ve also been discussing,
0:18:46 is set to list in London too.
0:18:48 So how do you think this IPO of this Raspberry Pi
0:18:52 computer company will affect
0:18:54 the broader IPO market in London?
0:18:56 – It’s a big deal because it could change
0:18:58 the world’s outlook on the London stock exchange
0:19:00 from the exchange of last resort to a player here.
0:19:03 The total capitalization of London listed equities fell
0:19:06 from $4.3 trillion in 2007 to about $3 trillion.
0:19:10 So it’s actually gone down about 40%,
0:19:13 and over the same period,
0:19:14 the value of US stocks has almost tripled to $53 trillion
0:19:19 in the US.
0:19:20 Raspberry Pi, it’s great for the exchange
0:19:22 because it’s sort of a cool little company
0:19:24 that had options to list on other exchanges,
0:19:27 and they’ve started trading
0:19:28 with a three-day conditional dealing period
0:19:31 during which trading was restricted
0:19:32 to institutional investors.
0:19:33 Maybe you can speak more about
0:19:35 what this sort of conditional period means.
0:19:38 – Yeah, I didn’t realize this, I had never heard of it,
0:19:40 but basically, if you IPO in the UK,
0:19:44 there’s this three-day period
0:19:45 where your shares are trading,
0:19:48 but they’re only available for trading among institutions.
0:19:51 And what’s particularly interesting is that
0:19:53 those shares are reserved,
0:19:55 but you don’t officially own them
0:19:57 until the three-day conditional dealing period ends,
0:20:01 which means that if you’re a company
0:20:03 and you decide to IPO
0:20:04 and you’re in the conditional dealing period,
0:20:06 you can just cancel the IPO
0:20:08 if you’re not getting the demand that you’re liking.
0:20:10 In other words, the London stock exchange
0:20:12 basically lets you do a test run before the real thing.
0:20:16 The thing I would ask to you is,
0:20:18 why do you think that they do this?
0:20:21 Like, and what does this say about the UK market
0:20:25 versus the US that they’d say,
0:20:27 oh yeah, we’re gonna give you three days
0:20:29 to sort of test it out among institutions,
0:20:31 but once it’s up, then you’re doing the real deal.
0:20:34 – Well, I mean, I don’t know if this is the reason for it,
0:20:37 but so the IPO market is rigged.
0:20:40 Essentially at prices, the bankers say,
0:20:42 this is a branding opportunity,
0:20:44 you wanna create positive momentum.
0:20:45 So price at 10, 20, 30% below
0:20:48 where we think it’s gonna open.
0:20:49 And then the investment banks get to give
0:20:52 basically free money to their institutional clients
0:20:55 as sort of a quick pro quo for doing all their business
0:20:57 through JPMorgan and Morgan Stanley or Goldman Sachs.
0:21:00 But the retail investors who don’t have access to the IPO
0:21:05 buy in at the first trade, which is sometimes much higher.
0:21:07 Now, technically it could go down a broken IPO,
0:21:09 but it usually doesn’t.
0:21:10 And sometimes as in the case of Airbnb,
0:21:12 it opens, it priced at 68.
0:21:15 That’s what institutions got to buy the shares for.
0:21:17 And it opened it, I think at 150,
0:21:19 which is where retail investors
0:21:21 got to buy it for the first time.
0:21:23 So a guy named Bill Hambrick came up
0:21:26 with this auction model back,
0:21:28 I think it was like 10, 20 years ago,
0:21:29 probably 20 years ago,
0:21:31 where the IPO would be,
0:21:34 they would basically pair the trade.
0:21:36 And that is people would bid,
0:21:38 buyers and sellers would bid in a Dutch auction
0:21:40 until the market demand was sated at the number of shares.
0:21:44 So it was sort of priced exactly
0:21:46 at where the first trade would be, right?
0:21:48 And that was a means of ensuring
0:21:50 that the company got the maximum amount of capital
0:21:52 for the same dilution.
0:21:54 And that did not survive because it ends up the ecosystem,
0:21:57 the biggest players in institutions
0:21:59 and the investment banks really liked a rig market
0:22:02 that retail investors kind of got screwed.
0:22:05 So I wonder if this is,
0:22:06 I don’t know the answer to this,
0:22:07 but is this an attempt to say,
0:22:09 look, retail investors are gonna get to pay
0:22:11 about the same number as institutional
0:22:14 and also give the company an out
0:22:16 if they don’t like where that number ended up being.
0:22:19 I don’t understand if this is nothing but
0:22:22 more lax rulings for the company
0:22:25 or an attempt to have retail investors
0:22:27 pay the same number as institutional.
0:22:30 – Yes, it’s not totally clear to me either.
0:22:31 Tune in next week for more shit we don’t know.
0:22:34 That’s why you had to tune in to Prop G.
0:22:37 But what about this?
0:22:38 No fucking idea, Ed.
0:22:40 How’s St. Bart’s?
0:22:41 – I don’t know.
0:22:45 I’m sure you’ll have a response to this.
0:22:48 So the CEO of this guy, Eben Upton,
0:22:51 was talking about his decision to list in London.
0:22:55 He said, quote, this was not a patriotic decision.
0:22:58 We did take a look at New York,
0:22:59 but we realized that for a company
0:23:01 of our scale, the London market is probably a better home.
0:23:04 He went on to say, quote,
0:23:06 many of the stories people tell
0:23:08 about the differences between the US and the UK,
0:23:11 particularly this sort of magical multiple arbitrage,
0:23:14 don’t seem to be real.
0:23:16 Which I find interesting because it’s almost,
0:23:19 it’s almost like it’s a jab at us
0:23:21 who have been basically saying exactly that,
0:23:23 that if you’re listing in the US,
0:23:25 you’re getting a little bit of a valuation jump
0:23:28 and that isn’t true in the UK.
0:23:30 And the reason that we say that
0:23:32 is because we just look at the numbers.
0:23:34 But apparently the CEO isn’t worried about that.
0:23:37 He isn’t worried about this multiple arbitrage issue.
0:23:41 So I’m just wondering what you think of his comments.
0:23:44 Do you agree with his point?
0:23:45 And do you think maybe he’s finding some other value
0:23:49 in listing in London versus New York?
0:23:51 – I don’t know because it might be.
0:23:52 So we’ve pointed out that stocks that trade
0:23:55 on the NYC and the NASAC traded whatever was 20,
0:23:57 an average multiple of 26
0:23:59 and all the other exchanges is around 13.
0:24:01 Now that might be a self-fulfilling prophecy
0:24:03 and that is the best company’s list on those exchanges.
0:24:06 It also might be much more heavily weighted towards
0:24:08 tech which traded a much higher multiple,
0:24:10 whereas the company’s the list on these other exchanges,
0:24:13 probably more manufacturing or services heavy
0:24:16 which don’t trade it as high multiple.
0:24:18 So it might be a function of the type of company
0:24:19 as opposed to just that these companies ran the gauntlet here
0:24:23 so it deserves a higher multiple, I don’t know.
0:24:26 But I think this is really good for competition.
0:24:29 I’m glad the LSE is getting some love.
0:24:33 The biggest beneficiary here in my view is Sheehan
0:24:36 because everything about Sheehan going public,
0:24:40 potentially on the LSE has been about,
0:24:42 oh, the exchange of last resort
0:24:43 and they couldn’t go public in the US.
0:24:46 Well, this is sort of creating some cloud cover
0:24:49 and some kind of some juju, some mojo,
0:24:53 some sex appeal, some pixie dust across the LSE
0:24:57 where good companies, innovative companies
0:24:59 are choosing this exchange.
0:25:01 So a company with whatever there’s,
0:25:04 I don’t know what the market cap’s gonna be here.
0:25:05 I can’t imagine this could be more than a few billion dollars.
0:25:08 That’s one thing, but the cloud cover
0:25:11 and the umbrella brand increasing in value of the LSE
0:25:14 when Sheehan goes out at a 70, 80, 90 billion dollar
0:25:18 valuation, if that makes the LSE and de facto,
0:25:22 Sheehan trade up five, 10% more,
0:25:26 you’re talking about seven to 10 billion dollars.
0:25:29 In other words, Sheehan, the best thing,
0:25:31 no one is happier about Raspberry Pi going public
0:25:33 on the LSE and having it being a good thing
0:25:35 than Sheehan right now.
0:25:37 Because what it says is no,
0:25:39 the LSE isn’t the exchange of last resort,
0:25:41 the good companies are going public here,
0:25:43 investors should look at it
0:25:45 and it’s not a hold your nose and buy it
0:25:48 because it’s on the LSE.
0:25:49 In other words, Raspberry Pi a little bit turns listing
0:25:53 on the LSE from a bug to a feature.
0:25:56 – And you’re happy, right?
0:25:57 You’re invested in Sheehan or you’re going to invest?
0:26:00 – I’m not as happy as if I was in the St. Bart’s
0:26:01 but I’m still pretty happy.
0:26:03 Yeah, I’ve invested in Sheehan and I’ve got,
0:26:07 I’m trying to find, I don’t have any inside information
0:26:09 but I’ve been investor and so I’ve been waiting
0:26:11 for the prospectus to come out.
0:26:13 I think they confidentially filed on the LSE
0:26:15 but the numbers that I’ve seen
0:26:17 and the information are that it did 30 billion last year.
0:26:21 It’s going to do I think 42 this year.
0:26:22 So it’s growing 40, I mean,
0:26:23 the numbers are just staggering here
0:26:25 and it’s also profitable.
0:26:27 And if you look at their competitors H&M or Zara,
0:26:30 they traded really healthy multiples
0:26:33 and it looks like this company should maintain its growth.
0:26:36 It’s going to surpass Amazon next year
0:26:37 in terms of retail, barrel sales
0:26:40 and then the year after that surpass Walmart
0:26:42 and probably have higher net margin.
0:26:45 So anything that creates cloud cover for a positive reception
0:26:49 I’m down with and excited about.
0:26:50 So yeah, I hope it goes well.
0:26:54 – We’ll be right back after the break
0:26:55 with a look at the hottest new AI startup in France.
0:26:58 – Vox Creative.
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0:28:40 – We’re back with ProfG Markets.
0:28:52 French AI startup, Mistral,
0:28:54 secured $640 million in new funding
0:28:57 at a $6 billion valuation.
0:28:59 That’s triple its valuation from December
0:29:02 and the company was founded just 14 months ago.
0:29:05 Their arm was led by General Catalyst
0:29:07 and included participation from Andreessen Horowitz
0:29:09 as well as NVIDIA and Salesforce.
0:29:11 So, Scott, Mistral’s now sitting on a billion dollars
0:29:14 in total funding.
0:29:16 Do you think it has any chance of taking on the likes
0:29:18 of open AI and possibly the other AI juggernauts?
0:29:23 – Well, I hope so, but according to what you just said,
0:29:24 it sounds like chatGPT is soaking up
0:29:26 or hoovering up all the revenue,
0:29:28 but I would imagine that the EU,
0:29:31 not only companies, but EU regulators
0:29:32 are really ready to be supportive
0:29:35 of a big tech or an AI company that’s on the continent.
0:29:38 I think they are kind of sick of sending
0:29:41 all of their capital overseas to, you know,
0:29:44 land at SFO International and then just stay there.
0:29:47 So I think that this company probably has,
0:29:50 and I’ve heard it’s a good company,
0:29:51 I’ve heard the interesting technology.
0:29:53 The French actually have a very strong background.
0:29:56 I mean, everyone knows that they have
0:29:57 an incredible background in luxury.
0:29:59 When you’re born in France, you’re just like,
0:30:00 at the age of three, you’re rearranging your blanket
0:30:03 and asking for your mes blankets.
0:30:05 And you just, you know,
0:30:06 the kids like have a rattle at it, it’s porcelain.
0:30:08 And then when they throw up their peas on their bib,
0:30:12 it’s designed better and it just looks more seamless somehow.
0:30:15 There’s something about the French, they just get beauty.
0:30:19 I mean, I’ll go to Cannes and I’ll go to these dinners
0:30:21 and be like, who picked out these linens?
0:30:24 These linens are beautiful.
0:30:25 There’s something in the water there, the DNA.
0:30:26 Anyway, that’s what we were doing last night.
0:30:28 We were looking at the wine glasses.
0:30:29 We were like, these glasses are so light.
0:30:31 They’re so beautiful.
0:30:32 Right?
0:30:33 In French, yeah, same part.
0:30:34 So here you go.
0:30:35 It’s unbelievable.
0:30:35 The genetic or the DNA or the business of luxury
0:30:38 has been the gift that has kept on giving in France.
0:30:41 The wealthiest man in Europe is Bernard Arnaud,
0:30:44 who immediately, you know,
0:30:45 pieced out to Belgium for tax avoidance,
0:30:48 but still Chanel, Hermes, you know, Vittane, not is Vittane?
0:30:53 Yeah, Vittane is Dior.
0:30:54 I mean, they just have such clothing,
0:30:57 they have such amazing brands, Clarence, you know,
0:30:59 they have such incredible staggering.
0:31:02 Anyway, what they don’t get enough credit for
0:31:04 is they actually have a fantastic schools in engineering
0:31:07 and Dassault makes an incredible plane.
0:31:10 Daddy wants a Falcon 9X.
0:31:13 Anyways, they have actually a very strong background
0:31:16 in engineering and this is coming through.
0:31:18 And I hope, I would love to see Europe, you know,
0:31:22 kind of punch above its weight class or not even that,
0:31:26 start punching at its weight class
0:31:28 in terms of tech startups.
0:31:30 There’s Salonis out of Germany,
0:31:32 which is an amazing software company.
0:31:34 There’s some fintech companies here in the UK
0:31:37 that are doing pretty well or okay, I should say.
0:31:39 So I hope this is a, I hope this is a win.
0:31:43 I’m a huge fan of General Catalyst.
0:31:44 I’m a bit pissed off, they can call me and say,
0:31:46 “Hey, Scott, you live in Europe
0:31:47 “and you’re super special and partying in Cannes.
0:31:49 “Do you want to invest?”
0:31:50 Didn’t get that call, Ed.
0:31:51 Didn’t get that call.
0:31:52 Also, I tell you, I haven’t been invited
0:31:53 to the fucking Eihardt party with Lenny Kravitz.
0:31:56 – I don’t know why you’re so upset about that, I guess.
0:31:58 – Pissed off, I’m gonna stand at the goddamn hotel.
0:32:02 How embarrassing is that?
0:32:02 I remember either with my boys and I’m like,
0:32:04 “Dad, it’s a party I can’t.
0:32:05 “I thought you were a big deal here.”
0:32:07 Yeah, I’m like, “No, no, let’s order room service.”
0:32:11 Anyways, but Mistral,
0:32:13 this needs to be a healthier ecosystem.
0:32:14 It needs to have more competition.
0:32:17 I hope that it does well.
0:32:18 I’m kind of curious, we need to do a deep dive here
0:32:20 and say what is its point of differentiation
0:32:24 as all of these things begin to look
0:32:25 like the same goddamn company?
0:32:27 – Yeah, I mean, if you look at the cap table,
0:32:30 the lead investor was General Catalyst,
0:32:32 which is an American firm.
0:32:33 Other investors include Andreessen Horowitz and Lightspeed.
0:32:36 There are several other VCs, most of them American.
0:32:39 Most interesting though to me is the corporate investor list.
0:32:43 So you’ve got Salesforce, Samsung, Cisco, IBM,
0:32:49 ServiceNow, NVIDIA and Microsoft.
0:32:54 So basically every single big tech company
0:32:57 who in my view, if this were like 20 years ago,
0:33:00 I think Mistral would be trying to compete
0:33:03 with those companies.
0:33:04 I don’t think they’d be taking their money
0:33:06 and giving them equity.
0:33:08 And you mentioned this issue of diversity,
0:33:10 we need more competition.
0:33:12 I feel like this all goes back to the antitrust issue
0:33:14 which we’ve been discussing.
0:33:16 And that is it feels like big tech
0:33:19 has a new monopolization strategy.
0:33:20 It used to be that you bought your competitors,
0:33:23 but then Lena Kahn came in, she sort of cracked down
0:33:27 and the FTC said, no, no more of that.
0:33:29 Now it feels like the strategy for big tech
0:33:32 is invest in your competitors
0:33:34 because by investing, you establish a level of power,
0:33:38 you get some control, you also get a share in the upside.
0:33:41 And crucially, as it appears, you don’t get regulated.
0:33:46 I mean, we haven’t seen any intervention from the FTC
0:33:49 or the DOJ on any of these corporate investments,
0:33:52 but it feels like the stones throw away
0:33:55 from just buying out your competition.
0:33:57 I don’t see how it’s that much different.
0:34:00 So what are your thoughts on this?
0:34:01 I mean, am I right to be concerned by the fact
0:34:04 that big tech and the MAG7 is basically spread out
0:34:08 across the cap tables of every single significant AI startup
0:34:11 in the world right now.
0:34:12 It’s not just America, it’s Mistral too,
0:34:14 this French company that you’d think is French,
0:34:17 but the entire investor base are just the same Americans.
0:34:20 Is this not kind of a problem?
0:34:22 – The way I would describe it is that if you’re a young man
0:34:24 looking to lose your virginity and live in Kentucky,
0:34:26 you should go to a family reunion.
0:34:28 In other words, there’s a lot of incest here.
0:34:31 And that is, is that wrong?
0:34:33 – Nope. – Was that wrong?
0:34:35 Literally we’ll hear from a dozen people from Kentucky.
0:34:36 I’m gonna find out people I didn’t even know were from
0:34:38 Kentucky or from Kentucky and that I was inappropriate.
0:34:41 – People were upset about what we said about Austin.
0:34:43 People were saying I was being rude to Austin
0:34:46 for saying I don’t want to live there.
0:34:47 – Yeah, just wait, it gets a lot worse.
0:34:49 Just so you know, half my emails are people telling me
0:34:52 what I should not have said and how their cousin suffers
0:34:57 from some syndrome that I’ve, anyways.
0:34:59 Look, you’ve pointed this out.
0:35:02 This industry is just way too incestuous
0:35:05 and has too many overlapping paths to one another.
0:35:08 It’s smart for them.
0:35:09 Nvidia wants to have a really robust ecosystem.
0:35:12 The last thing they want is a small number of players
0:35:14 bidding on their chips.
0:35:17 What they want is a ton of,
0:35:18 they want a huge customer base.
0:35:19 So for them, it makes a shit ton of sense for them to take,
0:35:24 okay, 5% of their market, 3% of the market cap
0:35:27 would be $100 billion and do everything they can
0:35:30 to try and foment, fund and catalyze a super robust
0:35:34 AI ecosystem where not only AI becomes bigger and bigger,
0:35:38 but there’s a variety of future customers
0:35:41 all needing these GPUs.
0:35:43 Also, just from a customer standpoint,
0:35:45 again, I just think regulators and European companies,
0:35:49 at some point, I mean, one of the reasons
0:35:52 I’m gonna get geopolitical here,
0:35:53 one of the most hopeful things about the conflict
0:35:56 in the Middle East right now, the war,
0:35:58 is that the Kingdom of Saudi Arabia
0:36:01 actually coordinated with Jordan to help shoot down
0:36:03 the projectiles coming from Iran.
0:36:04 I realize there’s a reach, but I will bring it home.
0:36:07 And that is the Kingdom wants to normalize relations
0:36:09 with Israel and I think part of the motivation
0:36:11 for normalizing relations is like,
0:36:14 we’re sick of getting on planes and sending money
0:36:16 out of the region to San Francisco for all of our tech.
0:36:19 Israel has a ton of great tech, they’re close to us,
0:36:23 we seem to get along, we’re sick of being,
0:36:27 I think everybody’s getting sick
0:36:30 of sending money back to the,
0:36:32 you wanna talk about real, at least metaphorically,
0:36:35 colonization, it’s American tech companies
0:36:39 that have basically turned every company in the world
0:36:41 into their colonies, sending resources back to,
0:36:44 back to Britain from India, and India is every company
0:36:47 in the world sending money to some company
0:36:49 that’s a bike ride from SFO International Airport,
0:36:53 that’s probably gonna take that metaphor a little too far,
0:36:55 but anyways, this is, I think that a lot of European companies
0:36:59 of Israel just offers a competent product
0:37:03 that’s in shooting distance or spitting distance
0:37:05 of these other guys, I think a lot of European companies,
0:37:08 maybe even under the auspices of not having
0:37:10 to pay additional taxes or whatever,
0:37:13 that the E regulars my place on non-European based tech,
0:37:17 I think this makes a lot of sense,
0:37:20 I think the investors here are smart to get into this thing
0:37:22 because any competent AI company on the continent,
0:37:26 it’s the largest economy in the world, the EO,
0:37:29 and I think a lot of European companies and regulars
0:37:31 would really like to be able to put their money
0:37:33 into a European tech company as opposed to
0:37:36 getting invited to listen to Sam Maltman,
0:37:38 give us hushed tone concerns around AI,
0:37:40 I think they’re kind of sick of these guys,
0:37:43 but anyways, we’ll see.
0:37:44 – Slight change of subject,
0:37:47 but we should talk about this new company Tempus AI
0:37:51 that’s going public, it’s a healthcare company,
0:37:54 but it’s also supposedly an AI company at the same time,
0:37:57 so that they’re aiming to raise $400 million,
0:38:00 they’re targeting a $6.1 billion valuation,
0:38:03 and they’re this precision medicine company
0:38:06 that quote, uses AI to make laboratory tests
0:38:09 more accurate, tailored, and personal.
0:38:13 Now, the reason I bring this up in this conversation
0:38:17 is because until about six months ago,
0:38:20 this company was called Tempus,
0:38:23 and today it’s called Tempus AI,
0:38:27 so they just tacked AI onto the end of the name
0:38:29 and now they’re going public.
0:38:30 And Mia looked at their S1,
0:38:33 she found that they mentioned AI 220 times
0:38:37 in the S1 filing,
0:38:38 and meanwhile as a percentage of revenue,
0:38:41 AI makes up, wait for it, 2% of the business.
0:38:45 I’m gonna go ahead and assume that you and I agree
0:38:49 that there is a very strong stench of BS
0:38:53 coming from this IPO, this Tempus AI IPO,
0:38:57 but as it relates to the broader market,
0:38:59 what do you think this IPO and this company says
0:39:03 about the rest of the AI market right now?
0:39:05 – First off, I like this company.
0:39:08 I actually emailed the CEO, he’s the former CEO of–
0:39:11 – Okay, so I’ve just been shitting on it.
0:39:13 – That’s why people come here,
0:39:16 they want a no mercy, no malice view of this shit.
0:39:18 Here, I mean, that’s why people love PropG.AI.
0:39:22 There’s a lot to like here, healthcare and AI,
0:39:27 and that just feels like champagne and cocaine, right?
0:39:29 I’ve always thought that healthcare
0:39:30 is the most fertile place for disruption
0:39:32 and the fists of stone coming for it might be AI.
0:39:36 It’s a real company, a lot of healthcare companies
0:39:40 use the product, they have real revenues,
0:39:42 they’ve been growing really fast.
0:39:44 Having said that, to your view, is it AI washing?
0:39:48 That’s the bottom line, right?
0:39:49 It’s not, I mean, the stat is crazy.
0:39:52 They mentioned AI 220 times,
0:39:54 and yet AI accounts for less than 2% of its revenue.
0:39:57 So this is gonna be a very interesting IPO to watch
0:40:01 because what it’s gonna indicate
0:40:03 is just how frothy the froth is.
0:40:06 And if this company goes out
0:40:08 and say it goes up 20, 50, 100% on the first trade,
0:40:11 then we know that the party is still going.
0:40:14 And by the way, they might be able to take that cheap capital
0:40:16 and get better at AI and go from 2% to 20%.
0:40:21 So again, see above storytelling.
0:40:23 Or if the market prices this thing
0:40:25 and it doesn’t have a first day pop
0:40:27 and maybe within a few days it’s a broken IPO,
0:40:30 it might signal a top.
0:40:32 It might signal that, okay, the halcyon days
0:40:36 of anything that says AI are over
0:40:39 and that people are sort of,
0:40:41 at some point people are gonna get very cynical
0:40:44 around this stuff, right?
0:40:46 – I’m already getting just so sick of it myself, yeah.
0:40:48 – I can imagine where at some point AI
0:40:50 starts to have the same stench as SPAC, right?
0:40:53 It’s like, okay, enough already or you weren’t around,
0:40:57 but William Sonoma is one of my first clients
0:41:01 as a strategy consultant.
0:41:03 And they were very seriously considering
0:41:05 changing the name to WilliamSonoma.com.
0:41:08 And there were a lot of companies
0:41:10 that thinking about .com and they added
0:41:12 and all that they used to run commercials with nothing,
0:41:14 but just the name and then .com.
0:41:16 – Given your experience there,
0:41:18 what do you think was the right move?
0:41:20 I mean, do you approve of a company
0:41:21 tacking AI onto the end of it?
0:41:24 Is it actually potentially a good thing for the business?
0:41:28 Would William Sonoma have benefited
0:41:30 from going the Amazon route and calling themselves,
0:41:33 WilliamSonoma.com, Amazon.com?
0:41:34 – It went further than that.
0:41:35 And I think the statute of limitations are over.
0:41:37 This was, Jesus, this was 30 years ago.
0:41:41 Let me see, I was 26, I’m 49 now.
0:41:43 So it was 23 years ago.
0:41:44 But I remember being in meetings with bankers
0:41:48 and the bankers were trying to convince
0:41:51 Howard and his team and they invited me
0:41:53 into these meetings to spin out the .com business.
0:41:57 They wanted to take WilliamSonoma.com
0:41:59 and spin it into a different business.
0:42:01 And of course, Howard goes,
0:42:02 “That’s makes no fucking sense.”
0:42:03 And the bankers were like,
0:42:04 “We get 10 times revenues for this business.”
0:42:06 As opposed to his choice, he was like,
0:42:07 “Yeah, but how do I get my store managers to participate?”
0:42:10 And he was just sort of,
0:42:12 he was not easily impressed by financial engineering.
0:42:15 I think that’s one of the things that made him a great CEO.
0:42:18 So if you look back, if history is any guide,
0:42:22 there aren’t that many companies
0:42:23 that were able to get so much cheap cash.
0:42:24 Well, I guess, I mean, Amazon, it was Amazon.com.
0:42:27 Eventually they sold, they dropped it .com.
0:42:29 But Amazon, there was a there there.
0:42:32 They were really selling all their shit online.
0:42:35 The other companies that tried to pull a fast one
0:42:37 and say, “Oh, we’re an internet company
0:42:39 that weren’t really an internet company.”
0:42:41 Like that shit blew up pretty fast.
0:42:44 It just, the whole thing just started collapsing on itself.
0:42:46 Now, the companies that made it through that valley of death,
0:42:49 Amazon and a bunch of others,
0:42:51 ended up being worth a ton of money.
0:42:54 The question is, when is that valley of death
0:42:56 or that shakeout gonna happen?
0:42:58 And I would bet that it’s,
0:42:59 you’re just seeing symptoms everywhere.
0:43:02 Now, does that mean it happens in three or six months
0:43:04 or in two or three years?
0:43:06 I don’t know.
0:43:07 It kind of feels like 98 to me.
0:43:09 I think we’re full for off
0:43:10 and we still got some running distance here.
0:43:12 But these cycles tend to,
0:43:14 the cycles tend to get shorter and shorter
0:43:16 or we tend to cycle through,
0:43:18 cycle through the cycle more rapidly, if you will.
0:43:21 But I think you’re gonna see,
0:43:23 I just think you’re gonna see an enormous fallout
0:43:25 and Tempus, bringing back to Tempus,
0:43:29 this will be a bit of a bellwether
0:43:33 for where we are in the, quote unquote, AI hype cycle.
0:43:36 – Yep.
0:43:37 So you think that the top is not already in?
0:43:39 – I think, let me go this way.
0:43:41 The way I would say it is the bell is in,
0:43:44 we have visual on the bell.
0:43:45 This stuff’s just getting kind of so out of control
0:43:48 that we can see the bell.
0:43:50 Now, is it gonna be wrong in three months or two years?
0:43:53 We’ll see, but there’s no way we can sustain these valuations
0:43:57 across a bunch of companies that quite frankly,
0:43:59 are just sort of David Copperfielding,
0:44:02 their business strategy by saying,
0:44:04 “Look over here, we’re AI.”
0:44:06 And then stuffing an analog rabbit into a hat.
0:44:09 – That was pretty good.
0:44:10 – That was good.
0:44:11 I think I’d argue that the bell for me was
0:44:13 Jensen Huang signing a woman’s chest.
0:44:15 I think that I’m gonna call that as my top.
0:44:17 – That was the bell.
0:44:19 That might be the image.
0:44:20 – All right, let’s take a look at the week ahead.
0:44:25 We’ll see US retail sales and existing home sales for May.
0:44:29 Scott, do you have any predictions for us?
0:44:31 – Well, I’m just super excited or super excited.
0:44:33 As much as I hated and as stupid as the Vision Pro was
0:44:36 for Apple, Apple’s intelligence is that smart.
0:44:41 Apple is the best managed brand in the world
0:44:43 and in a just a stroke of genius, they said,
0:44:44 “Okay, AI is starting to smell like Teen Spirit.
0:44:47 “If Teen Spirit was drama and people fired
0:44:50 “and rehired and catastrophizing,
0:44:52 “it’ll save the world, know to destroy the world.”
0:44:54 And I think that they just said,
0:44:56 “No, we wanna own this, make it our own,
0:44:58 “make it more friendly, make it less,
0:45:00 “make it less Skynet or weirdness.”
0:45:02 Let’s just call it Apple intelligence.
0:45:04 My prediction is big aflop is the Apple Vision Pro is
0:45:08 Apple intelligence will be that big a hit.
0:45:12 That was a mouthful.
0:45:13 Go drink rosé and take care of everybody.
0:45:17 Realize that the reason you’re there is because you work
0:45:20 for someone who is both talented and generous.
0:45:24 Remember what it was like to be a young person
0:45:25 with not a lot of money, although you are overpaid.
0:45:29 But I want you guys to have a wonderful time.
0:45:31 Eat fromage, eat fromage.
0:45:34 I want you to wear a thong, scare some people.
0:45:38 There’s actually a new beach at, what is it?
0:45:41 I think it’s at, where’s that new beach?
0:45:44 It’s on, oh God, what the fuck is my name?
0:45:46 Anyways, you’ll find it, you’ll find it.
0:45:49 Anyways, HR Nightmare.
0:45:50 Your boss telling you to find a new beach.
0:45:53 Call HR.
0:45:54 – This episode was produced by Claire Miller
0:45:57 and engineered by Benjamin Spencer.
0:45:58 Our associate producer is Alison Weiss.
0:46:00 Our executive producers are Jason Stavis and Catherine Dillon.
0:46:03 Mia Silverio is our research lead
0:46:05 and Drew Burroughs is our technical director.
0:46:07 Thank you for listening to Prof. G Markets
0:46:09 from the Vox Media Podcast Network.
0:46:10 Join us on Thursday for our conversation with Ray Dahlio.
0:46:14 (upbeat music)
0:46:17 – Support for the show comes from Atlassian.
0:46:33 What do you think of when you hear the word flow?
0:46:35 How about a smooth river of collaboration
0:46:37 culminating in a shared ocean of positive outcomes
0:46:40 across your organization?
0:46:42 I thought I was the one doing ketamine.
0:46:43 Anyways, Atlassian software like Loom, Confluence and Jira
0:46:46 can help you achieve maximum flow across your teams
0:46:49 by enabling fast and easy communication and connection
0:46:51 no matter what time zone they’re in.
0:46:53 Because individually, we’re great,
0:46:56 but together, we’re so much better.
0:46:57 Learn how to unlock flow across your teams at Atlassian.com.
0:47:01 That’s A-T-L-A-S-S-I-A-N.com.
0:47:06 Atlassian.
0:47:07 (upbeat music)
0:47:10 (upbeat music)

0:00:00 Support for Prop G comes from BetterHelp Online Therapy.
0:00:03 We waste a lot of time worrying about what we haven’t done,
0:00:05 and this may sound a little corny,
0:00:07 but taking a second to appreciate your wins is important.
0:00:09 Personally, this year I am spending more time with my boys.
0:00:12 Good for me. If you’d like to celebrate your own wins
0:00:15 and make some adjustments for the rest of the year,
0:00:17 BetterHelp Online Therapy is a great place to start.
0:00:19 It’s entirely online, which makes it more convenient
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0:00:24 Take a moment, visit BetterHelp.com/ProphecyToday
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0:01:11 Atlassian.
0:01:11 I’m Scott Galloway, and this is No Mercy, No Malice.
0:01:22 Innovation is overrated.
0:01:24 The best strategy, second mouse.
0:01:29 And nobody does second mouse better than Apple.
0:01:32 Secondmouse.ai, as read by George Hahn.
0:01:36 As stupid as Apple’s Vision Pro is,
0:01:42 Apple intelligence is that intelligent.
0:01:46 Innovation is overrated.
0:01:49 Specifically, disruptive innovation,
0:01:52 the kind that marks a before and after in our lives,
0:01:57 is terrible for shareholder value.
0:02:00 Some innovators that changed our lives?
0:02:03 Seattle computer products.
0:02:05 Xerox Park, Grid, Palm, Netscape,
0:02:09 Friendster, Blackberry, Alta Vista, Nokia.
0:02:13 Combined market capitalization, $21 billion.
0:02:18 And that’s only because Blackberry and Nokia
0:02:21 somehow still exist.
0:02:24 Xerox donated Park to a non-profit in 2023,
0:02:28 valuing it at $132 million.
0:02:30 Just four of the companies that capitalized
0:02:35 on the innovations of the departed,
0:02:37 Microsoft, Apple, Google, and Meta,
0:02:41 register a market capitalization of seven plus trillion dollars.
0:02:46 The second mouse often gets the cheese.
0:02:51 Tesla didn’t invent the consumer electric car.
0:02:54 GM.
0:02:56 Visa didn’t invent the credit card.
0:02:58 Diners Club.
0:03:00 McDonald’s didn’t invent fast food hamburgers.
0:03:03 White Castle.
0:03:05 And Coca-Cola didn’t invent soda.
0:03:08 Dr. Pepper.
0:03:10 One firm enjoys a market cap larger than all five combined.
0:03:15 Apple is a second mouse the size of a blue whale.
0:03:21 AI has seen a brand equity implosion in 2024,
0:03:26 similar to that suffered by the Supreme Court,
0:03:29 Twitter, and elite colleges.
0:03:32 The promise of the AI brand is that it will either
0:03:36 save us or kill us all.
0:03:38 It has done neither.
0:03:40 Any time saved by AI has mostly been chewed up
0:03:44 listening to breathless media reports on management
0:03:48 or lack thereof drama at Microsoft AI.
0:03:52 Some people call it open AI.
0:03:55 The brand is the offspring of capitalism
0:03:57 and the Bravo Channel.
0:04:00 Staggering increases in shareholder value
0:04:02 mixed with IP theft, hallucinations,
0:04:05 and constant catastrophizing.
0:04:07 It’s as if Rupert Murdoch got married
0:04:09 for a sixth time to Skynet.
0:04:13 I’m especially proud of the previous sentence.
0:04:16 Apple’s move to shit can the AI brand
0:04:18 and opt for Apple intelligence
0:04:21 is the best brand move of 2024.
0:04:25 The worst?
0:04:26 A, a toss up between a Chardonnay fueled decision
0:04:30 to hang the stars and stripes upside down
0:04:32 or the zombie apocalypse of useful idiots on US campuses.
0:04:37 Apple intelligence is more than a great brand move.
0:04:43 It encapsulates the company’s strategy.
0:04:47 Take something invented elsewhere,
0:04:49 make it more user friendly, easier to use and more reliable,
0:04:53 mix in world-class industrial design and print billions.
0:04:58 Artificial intelligence is for tech bros and data scientists.
0:05:04 Apple intelligence is AI for the rest of us.
0:05:09 Shrewd.
0:05:12 The tech press has spent the past 18 months
0:05:15 telling us Apple is behind on AI.
0:05:19 While in the next breath,
0:05:20 reporting on the AI gaffes produced by its rivals.
0:05:24 And that’s the point.
0:05:26 Apple is always behind.
0:05:29 Apple is a distinctly inventive company.
0:05:32 Its $30 billion R&D budget generates
0:05:35 2,000 plus patents per year.
0:05:38 But it’s mainly improving versus inventing.
0:05:42 Ways to more precisely cut white cardboard boxes
0:05:45 to deliver its new devices,
0:05:47 new glues to bond layers of glass and plastic together
0:05:50 in its phones.
0:05:52 For the big stuff, like the mouse, digital music
0:05:55 and multi-touch screens,
0:05:57 it lets someone else traverse the Sierra Nevadas first.
0:06:00 What has Apple really been behind on?
0:06:05 The economist estimates that AI will generate $20 billion
0:06:09 in revenue for AI leaders,
0:06:12 Alphabet, Amazon and Microsoft in 2024.
0:06:16 A whopping 2% of their combined revenue.
0:06:20 Apple makes close to $20 billion just from AirPods.
0:06:26 Think about that.
0:06:28 All that hype and increased shareholder value
0:06:31 rivaling the GDP of Germany
0:06:33 and the AI industry is so far the same size as AirPods.
0:06:39 The media tells us Apple isn’t an attractive employer
0:06:42 for cutting edge AI researchers because of its secrecy.
0:06:47 But the company is content to let artificial intelligence
0:06:50 scientists work elsewhere and publish their work
0:06:53 and exchange ideas freely.
0:06:55 When Apple does try to be cutting edge,
0:07:00 it confirms the merits of its slower approach.
0:07:04 When it launched Siri in 2011,
0:07:06 using technology it acquired,
0:07:09 Samuel L. Jackson introduced the digital assistant
0:07:13 science fiction had been promising us.
0:07:15 Even today, Siri doesn’t work as well as promised in 2011.
0:07:21 I just asked her the same question Jackson asked in 2011.
0:07:25 – Find me a store that sells organic mushrooms
0:07:27 for my risotto.
0:07:28 – This organic market looks pretty close to you.
0:07:31 – And she gave me a list of UPS stores.
0:07:34 Siri is Apple’s most glaring failure,
0:07:39 even more so than the Vision Pro.
0:07:41 The headset is a sideshow.
0:07:44 An insurance policy Tim Cook purchased
0:07:46 in case that mendacious fuck, one guess,
0:07:49 was right about headsets.
0:07:52 Apple spent couch change just in case Zuck knew hardware.
0:07:57 He didn’t.
0:07:58 Siri, however, is supposed to be at the heart
0:08:00 of Apple’s most important products.
0:08:04 Apple has the brand equity and capital
0:08:06 to absorb mistakes like these,
0:08:08 but the missteps show that being first
0:08:11 is not the winning strategy.
0:08:13 Alexa and Google Assistant are better than Siri,
0:08:18 but they aren’t better enough.
0:08:21 They also came out too early,
0:08:22 got bogged down in the Sierras,
0:08:25 and were forced to eat each other.
0:08:26 Too much?
0:08:29 If Apple Intelligence delivers on the promise made this week,
0:08:33 this version of Siri will be the product
0:08:36 Apple should have waited to launch.
0:08:38 Apple has learned to under promise,
0:08:41 in contrast to the rest of the AI committee,
0:08:44 who tell us in hushed tones
0:08:47 how concerned they are about AI.
0:08:50 That’s an obnoxious humble brag.
0:08:52 The anti-Apple crowd growled that Android
0:08:55 already has many of Apple’s new features.
0:08:59 It does, sort of.
0:09:01 If you have the right phone
0:09:03 and can navigate a complex ecosystem,
0:09:06 it has artificial intelligence.
0:09:11 Apple Intelligence’s integration of chat GPT
0:09:14 also elegantly eliminates an existential threat.
0:09:19 Few firms have the consumer resonance
0:09:21 and cheap capital to launch a handheld phone.
0:09:25 It’s been reported that OpenAI
0:09:27 is planning to develop an AI phone
0:09:29 with former Apple designer Johnny Ive.
0:09:32 But why would you wanna chat GPT phone
0:09:35 when you can have chat GPT on an iPhone?
0:09:39 On the day of Apple’s worldwide developer conference,
0:09:43 when Apple Intelligence was introduced,
0:09:46 the stock declined 2%.
0:09:49 However, as with an intelligent joke,
0:09:52 it took a beat to absorb the real insight.
0:09:57 From a shareholder standpoint,
0:09:59 Apple Intelligence has positioned the company
0:10:02 to again create the second
0:10:04 most profitable licensing deal in history.
0:10:07 Much of Apple’s shareholder value
0:10:10 hasn’t come despite competition from Microsoft or Google,
0:10:14 but because of it.
0:10:16 Specifically, Apple’s ability as gatekeeper
0:10:20 to the Earth’s billion most affluent inhabitants
0:10:23 to pit the two against each other.
0:10:26 Alphabet pays Apple $20 billion each year
0:10:31 to make Google the default search
0:10:34 and gain VIP access to the Premier Club on the planet.
0:10:38 It’s likely $19.8 billion of that hits the bottom line.
0:10:44 At a PE of 32, the Alphabet deal is responsible
0:10:49 for 20% of Apple’s market cap.
0:10:52 Incorporating OpenAI’s chat GPT
0:10:56 positions the business to put ballgags
0:10:59 on both Microsoft OpenAI and Alphabet
0:11:03 and molest them as they’ll be forced to pay billions
0:11:07 for direct access to Apple’s users.
0:11:10 At launch, Apple is reportedly letting chat GPT in
0:11:15 for no fee, but don’t expect that to last.
0:11:19 As Apple is likely erecting a toll booth
0:11:21 and it will surely take its usual cut
0:11:25 from premium chat bot subscriptions bought via iPhone.
0:11:29 The market figured this out
0:11:31 and over the next two trading days,
0:11:34 Apple added $300 billion in market cap.
0:11:38 Apple intelligence, by any other name,
0:11:41 is this decade’s Apple monopoly tax.
0:11:44 Generative AI has been the anodyne buzzword in tech
0:11:50 since chat GPT launched,
0:11:52 but there’s something more powerful.
0:11:55 Contextual AI.
0:11:57 I don’t need AI to know everything
0:12:00 about Icelandic history or sinus medication.
0:12:03 I need it to know about me.
0:12:06 The most impressive AI feature on my iPhone is memories.
0:12:12 I don’t know how or when it was added, but it’s powerful.
0:12:16 Out of nowhere, I get notifications.
0:12:18 You have a new memory.
0:12:20 And there is a cropped image of my boys
0:12:22 on their first day of school,
0:12:24 the younger one clinging to his mother
0:12:26 that flows into another image
0:12:27 of the older one not comforting him.
0:12:29 All set to music that morphs my older son’s disposition
0:12:34 into endearing from indifferent, but I digress.
0:12:39 I use AI for brainstorming and research,
0:12:42 thus far that hasn’t affected my life nearly as much
0:12:45 as the ability to more easily search my photos.
0:12:48 A feature Apple intelligence will enhance.
0:12:52 A well-timed memory renders me a chocolate mess
0:12:57 in a good way.
0:12:58 No number of parameters in GPT-5 will generate that.
0:13:03 Integration into the Apple ecosystem
0:13:07 was the theme of the Apple intelligence announcement,
0:13:10 giving the AI the context of our email and messages,
0:13:14 calendar, browser history,
0:13:16 the whole storehouse of information already on our device.
0:13:21 Post-launch, Apple intelligence will start to reach out
0:13:25 to third-party apps and services beyond our devices.
0:13:29 That’s where the real cheese lies.
0:13:32 Scott, how’s your shoulder pain?
0:13:34 Do you want me to make an appointment
0:13:35 with your physical therapist?
0:13:37 Design matters and Apple’s AI features will reflect that,
0:13:43 but Apple’s greater advantage at this stage
0:13:46 of its evolution isn’t design or technology
0:13:50 or distribution, though all are best in class.
0:13:54 Its advantage is that for the wealthiest
0:13:57 billion people on earth, an iPhone is the first device
0:14:02 they see in the morning and the last before they go to sleep
0:14:06 and it’s never more than a few feet
0:14:08 from them throughout the day.
0:14:10 Everything I do is on my phone.
0:14:13 The LLM that gets my discretionary spending
0:14:16 will be the LLM that gets me.
0:14:19 And that means it has to live on my iPhone.
0:14:23 Another advantage of the second mouse strategy
0:14:27 is that when you fail, it’s a whole lot cheaper.
0:14:31 The exit wounds are clean and heal quickly.
0:14:34 Meta has burned $46 billion to stuff the same drawer
0:14:40 that has your Nike Fuel Band
0:14:43 with Zuckerberg’s VR hallucination.
0:14:45 Apple’s cheaper call option on the metaverse
0:14:49 can be quietly killed in a few years
0:14:51 with no lasting damage.
0:14:54 In innovation-driven industries,
0:14:56 how you fail is almost as important as how you succeed.
0:15:00 I predicted the Vision Pro would be a failure
0:15:04 when it launched, but I didn’t sell Apple stock.
0:15:07 Next year will probably be the year
0:15:12 that real winners and losers start to emerge in AI.
0:15:15 We’re still in the Netscape stage
0:15:18 when the technology itself is the innovation.
0:15:22 Because our government spent the last 40 years
0:15:24 asleep at the switch on antitrust,
0:15:27 the usual big tech giants will fight for AI supremacy
0:15:31 and Apple is holding a strong hand.
0:15:35 Not just because of its second mouse strategy,
0:15:38 but also thanks to its vertical integration.
0:15:41 There is a lot of money to be made
0:15:43 adopting an asset light model.
0:15:45 C, Airbnb, Sheehan, NVIDIA, more on that in another post.
0:15:50 But Apple’s contrary approach has its advantages.
0:15:55 Apple intelligence requires massive computational power
0:15:59 to run LLMs on the device.
0:16:02 But that’s key to its contextual awareness,
0:16:04 speed, and reliability.
0:16:07 When these features roll out later this year,
0:16:10 they will only work to their fullest
0:16:11 on the latest Apple devices,
0:16:14 giving a billion or so users of older editions
0:16:17 a reason to upgrade.
0:16:19 Then they’ll work on every future iPhone and iPad and Mac.
0:16:23 This sharpens an edge over Alphabet,
0:16:27 which can’t ensure every Android phone
0:16:29 has the necessary hardware to run Gemini Nano,
0:16:32 the Android LLM equivalent to Apple Intelligence,
0:16:35 or even access to the updated OS.
0:16:38 Android’s Achilles heel has long been this fragmentation.
0:16:43 What you see running on pixels in the keynote
0:16:46 takes years to filter down to the phones
0:16:49 most Android users actually own.
0:16:51 I spend a great deal of my wealth on homes in nice places.
0:16:58 The goal is to live where my sons
0:17:00 and the people they collect will come visit me.
0:17:03 I think a lot about death.
0:17:06 It gives me power or courage
0:17:10 to live a bit louder and less fearfully.
0:17:13 And when the ass cancer comes,
0:17:16 I plan to be in a beautiful place,
0:17:18 surrounded by people who will miss me terribly,
0:17:21 a shit ton of heroin and Tom Petty,
0:17:24 who will be joined by his best friends from the 80s.
0:17:27 In addition, I plan to live my life over again,
0:17:32 courtesy of Apple Memories.
0:17:34 And that’s the real promise of technology,
0:17:38 not to explore new worlds in a dildo
0:17:40 or reduce customer service costs,
0:17:44 but to save people time
0:17:45 so they can spend more moments with loved ones
0:17:49 and feel closer to them.
0:17:51 Tech’s promise isn’t artificial intelligence,
0:17:56 but native intimacy.
0:17:59 Life is so rich.
0:18:05 (upbeat music)
0:18:07 (upbeat music)
0:18:10 (gentle music)
0:18:12 [BLANK_AUDIO]

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0:00:43 More to-dos, less time,
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0:00:47 Sometimes doing business has never felt harder.
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0:00:52 You can just use HubSpot
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0:01:08 Visit hubspot.com to get started today.
0:01:11 Welcome to the PropG Pod’s Office Hours.
0:01:16 This is the part of the show
0:01:17 where we answer your questions
0:01:18 about business, big tech, entrepreneurship,
0:01:20 and whatever else is on your mind.
0:01:22 In last week’s Office Hours,
0:01:23 we answered your questions surrounding luxury, commerce,
0:01:25 the rise of the remote husband, and time management.
0:01:28 So what you’ve seen is, effectively,
0:01:31 everyone’s been crowded out.
0:01:32 This goes to a broader issue
0:01:34 in that I believe almost every industry
0:01:36 is turning into an oligopoly.
0:01:38 You will lose some professional trajectory.
0:01:41 You will lose some opportunity to develop relationships
0:01:43 that will pay off later in life by being remote.
0:01:46 I just think to myself, okay,
0:01:48 is this something I need to do,
0:01:49 or I have to do, or something I want to do,
0:01:51 and then I eliminate everything else.
0:01:54 Today, we’ll answer your questions
0:01:55 about AI and higher education,
0:01:57 the intersection of passion and talent,
0:01:59 and charitable giving.
0:02:01 So with that, first question.
0:02:03 (phone ringing)
0:02:06 – Hi, Scott.
0:02:07 I work in college student affairs,
0:02:09 and I’ve been both curious and concerned
0:02:11 about the rise of AI
0:02:12 and how it’s changing higher education as an industry.
0:02:15 Open AI just announced their new ChatGPT EDU product,
0:02:20 which feels like a play to legitimize
0:02:22 and maybe tame the untamed Wild West aspect of AI.
0:02:27 How do you think a product like ChatGPT EDU
0:02:30 will influence the rest of ed tech
0:02:32 which you criticized in the past?
0:02:34 Thanks for all the content.
0:02:36 I don’t always understand what you’re talking about,
0:02:38 but I always learned something.
0:02:40 – Okay, so a thoughtful question,
0:02:42 and let’s be clear,
0:02:43 I don’t always understand what I’m saying.
0:02:45 So look, ChatGPT EDU is a version of ChatGPT
0:02:49 built on its faster GPT-4O model.
0:02:52 God, talk about some shitty branding.
0:02:55 Specifically for universities.
0:02:56 According to Open AI, ChatGPT EDU
0:02:59 allows universities to responsibly deploy AI to students.
0:03:02 Yeah, that’s what they’re worried about.
0:03:04 Faculty researchers and campus operations.
0:03:06 Open AI has claimed it’s available
0:03:08 at an affordable rate for universities.
0:03:10 It’s smart, almost every software or media company
0:03:14 or even Apple has discounted rates for universities
0:03:17 because that is an audience
0:03:19 that will represent a fairly significant lifetime value
0:03:22 both in terms of economics and influence.
0:03:26 ChatGPT EDU also offers reliable administrative controls
0:03:29 robust data security and high usage limits.
0:03:32 Examples of ways you can use ChatGPT EDU
0:03:35 per Open AI’s release include personalized tutoring
0:03:38 for students, right grant applications,
0:03:40 assist professors with grading,
0:03:42 several universities including ASU,
0:03:44 University of Oxford, a bunch of them, UT Austin,
0:03:48 have been key players in shaping ChatGPT EDU.
0:03:50 Look, I like this.
0:03:51 I don’t think you can keep technology in a bottle
0:03:55 across any sector and also in education.
0:03:57 I remember that when I was in business school,
0:04:00 there was a little bit of debate around
0:04:02 whether we should be allowed to use spell check.
0:04:04 I just think you should give your students,
0:04:06 you want your students to be critical thinkers,
0:04:07 you want them to be just ninja warriors
0:04:10 and you want to essentially train them
0:04:11 to use every tool such that they are better
0:04:14 than their average bear, it can develop differentiation,
0:04:17 the currency and the margin that commands
0:04:20 in the marketplace such that they can do good things,
0:04:23 lead the world, save the dolphins.
0:04:24 And mostly, in my view, create economic security
0:04:26 for them and their families.
0:04:27 I think that’s why most people pursue higher education
0:04:30 other than the beer and football, which is why I went.
0:04:33 But I think that we want to give them
0:04:35 as many tools as possible.
0:04:36 I tell my students to use ChatGPT to the extent they want.
0:04:40 If it’s something comes back anodyne and bad,
0:04:43 and I believe I can notice something,
0:04:45 whenever I get really pissed off of my team
0:04:47 and I get shit that I think is just mediocre,
0:04:50 I say, what did ChatGPT write this?
0:04:52 Because it comes back like a computer wrote it, I find.
0:04:55 I find it’s a great tool for brainstorming.
0:04:58 So for example, if I’m looking for,
0:05:00 I don’t know, characteristics of income inequality
0:05:03 in Northern Europe versus Southern Europe,
0:05:06 it’ll write something up for me and it’ll give me examples.
0:05:08 And I don’t like most of them and I don’t like the way
0:05:09 it frames it, but it’ll give me two or three things
0:05:11 I haven’t thought of before.
0:05:12 I use it for brainstorming.
0:05:13 Will it get to the point where it can write in the voice of,
0:05:16 I don’t know, a Maureen Doubt or a JD Solinger, probably,
0:05:19 but I think it’s still a long way from there.
0:05:21 I think we let kids have at it and raise the standards,
0:05:25 have them expect higher quality work for them.
0:05:28 I think this makes a lot of sense.
0:05:29 Now as it relates to higher ed,
0:05:32 everyone’s saying Harvard’s out of business,
0:05:33 bullshit, Harvard will go from 55,000 applicants
0:05:36 to 45,000 and keep in mind they’re a corrupt institution.
0:05:39 It’s really a hedge fund just offering classes
0:05:41 and they’ll still just let in 1,500 kids.
0:05:43 So instead of admitting 5% they’ll admit 6%.
0:05:47 The elite schools aren’t in the business of educating.
0:05:50 We’re in the business of certifying.
0:05:51 Our value add is our brand and our admissions department,
0:05:55 which pre-screens people who are,
0:05:56 and only lets in freakishly remarkable people.
0:05:59 So if you could have a button on LinkedIn
0:06:02 that said freakishly remarkable,
0:06:03 it would give you graduates of elite colleges
0:06:05 or children of rich people,
0:06:07 which quite frankly in our economy
0:06:08 are good people to hire oftentimes.
0:06:10 Sometimes they’re a lot of times they’re shitheads,
0:06:12 but they have a lot of contacts.
0:06:13 So anyways, I’m not even gonna go
0:06:16 into the whole NEPA bullshit,
0:06:18 but you effectively have elite colleges are gonna be fine.
0:06:21 Technology is not gonna disrupt them.
0:06:23 The online ed space, which I am in, has been a shit show.
0:06:28 I got this wrong.
0:06:29 It has not disrupted traditional education.
0:06:30 Those brands are the strongest brands in the world.
0:06:33 They say Apple or Coca-Cola are the strongest brands
0:06:36 in the world, bullshit.
0:06:37 Harvard, MIT and Stanford are the strongest brands
0:06:39 in the world, no one’s giving Apple $200 million
0:06:41 for their name on the side of a building
0:06:43 on the Cupertino campus.
0:06:44 These brands are really fortresses.
0:06:47 Now, are they gonna be disrupted?
0:06:48 Are there, is there an overdue reckoning?
0:06:51 Yeah, it’s not gonna come from students or applicants though.
0:06:53 It’s gonna come from donors.
0:06:55 These organizations have built these insatiable beasts
0:06:58 around all their bullshit of people, administrators,
0:07:00 thoughtful people, FIPS, formerly important people,
0:07:03 hanging out as the vice chancellor of something
0:07:05 before they run for Senate and lose again.
0:07:08 And the reckoning is gonna come from alumni who say,
0:07:10 “Fuck this, I am no longer going to fund
0:07:13 the zombie apocalypse of useful idiots on campuses
0:07:17 and pull their funding, which will require,
0:07:19 which will require a modification or a reduction
0:07:22 in their, or a rethinking of their cost structure.
0:07:25 They will turn to AI to relieve some,
0:07:28 some teachers of their administrative tasks
0:07:30 that they were smart.
0:07:31 They would cut 10, 20, 30% of the cost right now.
0:07:33 Where did, when the hell were we asked
0:07:35 to morph from being centers of excellence
0:07:37 to social engineers?
0:07:38 No one ever asked us to do that.
0:07:40 Anyway, where are you gonna see the biggest impact of AI?
0:07:43 Is leveling the playing field
0:07:45 across lower and middle income homes?
0:07:47 What do I mean by that?
0:07:49 I engage in this.
0:07:50 My kid has tutors.
0:07:51 I actually just told us he doesn’t want a tutor
0:07:53 and we’re like, okay.
0:07:54 And then we realize that he’s a kid,
0:07:55 which means he’s stupid.
0:07:56 And as I think about this,
0:07:57 I’m gonna force him to have continuous math tutor.
0:08:00 But tutors are expensive
0:08:02 and the reason they’re expensive is they’re effective.
0:08:04 And they help your kid get better grades,
0:08:05 help them do better on tests.
0:08:07 What this will be,
0:08:08 I think the biggest impact this is gonna have
0:08:10 on primary education is that ChatGPT and Anthropic
0:08:14 will be able to offer what are pretty reasonable facsimiles
0:08:18 of $150 an hour tutor for nearly free.
0:08:22 Now, you’re gonna have to monitor your kid more closely,
0:08:24 but I think they’re gonna be able to zero in
0:08:26 on where the kid is weak,
0:08:28 where he or she is strong and level them up,
0:08:31 even if they don’t have wealthy parents.
0:08:32 I think that’s a great thing.
0:08:33 Unfortunately, it’ll also lead to great inflation
0:08:36 and take the bar even higher.
0:08:37 I sometimes worry about my 16 year old
0:08:40 in the sense that you want your kid
0:08:41 to have just the right amount of stress.
0:08:43 You don’t want them to be totally carefree
0:08:45 and walking or sleepwalking through life
0:08:46 as I was at 16 and I give a shit.
0:08:48 But at the same time,
0:08:49 you don’t want them to be one of the part
0:08:50 of the anxious generation.
0:08:52 You want them to have just enough amount of stress.
0:08:54 But on the whole, on the whole,
0:08:57 ChatGPT isn’t gonna change the elite institutions.
0:09:00 They have brands that are almost impenetrable.
0:09:02 It will provide an opportunity for an overdue look
0:09:05 at cost cutting at an administrative level.
0:09:07 And I think the good part will be
0:09:09 that it’ll push tutorial
0:09:11 or the tutorial industrial complex will bring the cost down
0:09:14 and offer it up for middle-class and low-income homes.
0:09:16 Thank you so much for the thoughtful question.
0:09:20 Question number two.
0:09:21 – Hey Scott, I’m a big fan of the show and your latest book.
0:09:24 I’m 24 and working in advertising as a visual effects artist
0:09:27 at a small, but successful studio in New York.
0:09:30 I graduated two years ago with a degree in visual effects
0:09:33 and chose a job in advertising
0:09:34 over some lesser paying jobs in film and TV.
0:09:37 I’ve just read the chapter of your book
0:09:38 about finding your talent
0:09:39 and I’m trying to identify where I draw the line
0:09:41 between my own talent and passion.
0:09:43 I feel very lucky that I’ve begun a career in visual effects
0:09:46 and I like to think that I’ve got at least some talent for it,
0:09:48 given my ability to leverage my portfolio for jobs so far.
0:09:51 Call it if you’re burnout or diminishing passion or both,
0:09:54 but I’m wondering if you have any advice for young people
0:09:56 whose passion and talent seem to be awkwardly blurred together.
0:09:59 How do you go about separating them to avoid,
0:10:01 as you said in the book, letting the work spoil the passion?
0:10:04 And is there a way of balancing both on a schedule
0:10:06 you can’t control?
0:10:08 – So Ryan, if you’re doing something you’re good at
0:10:10 and you like, maybe you don’t even love it at this point,
0:10:13 it’s hard to find something you love at a young age
0:10:15 because generally at a young age,
0:10:17 it means you’re doing the shit work.
0:10:18 You’re doing the work that no one else wants to do.
0:10:21 You’re editing stuff, you’re writing the copy.
0:10:23 You’re, you know, your bosses get to show up late,
0:10:26 but you don’t.
0:10:27 I do that a lot and it’s something I hate
0:10:29 about myself and my newest resolution
0:10:31 is the same every year, be on time for stuff.
0:10:33 And I’m not, I don’t know if it’s because I like
0:10:34 the rush of being late or I’m just a narcissist,
0:10:37 but anyways, I don’t know how I got here.
0:10:39 It sounds to me like you’re kind of where you should be.
0:10:42 And that is you’re getting good at something
0:10:44 and ask yourself, could I be great at it?
0:10:46 And if you can be great at it,
0:10:48 would I can promise you with near certainty
0:10:50 or assure you or claim with near certainty?
0:10:53 I guess I guess a promise that’s 100% certainty
0:10:55 is that if you become great at it,
0:10:57 you’re gonna become increasingly passionate about it.
0:11:00 Because the accoutrements of being passionate
0:11:01 about something, the camaraderie, the economic security,
0:11:05 the prestige, the achievement, the ability,
0:11:08 or just the recognition when you produce something great
0:11:10 with a team of people, it feels really good.
0:11:13 I think it’ll make you passionate about whatever that is.
0:11:15 I think passion comes from mastery.
0:11:18 So, I mean, a couple of things.
0:11:20 One, look at the space you’re in and think,
0:11:22 am I learning a lot?
0:11:24 Am I learning a lot at this company?
0:11:25 Do I have senior level sponsorship?
0:11:27 Is the firm doing well?
0:11:28 Is it a good culture?
0:11:30 Do they pay me fairly?
0:11:31 Is there a path?
0:11:32 Has someone taken an irrational interest
0:11:35 or at least a real interest in my future
0:11:38 and it’s coaching me?
0:11:39 All of these things are important to ask yourself
0:11:42 at a specific organization.
0:11:44 Separate that, the organizational components
0:11:46 to do I like this field?
0:11:48 Am I good at it?
0:11:49 Could I be great at it?
0:11:50 And it strikes me that your industry is gonna go
0:11:52 through tremendous disruption.
0:11:53 A friend of mine has invested in an Indian special effects
0:11:55 company that uses technology to bring down the cost.
0:11:58 I think they did a lot of the special effects for Dune
0:12:00 and instead of costing 10 million,
0:12:02 it costs three or four, seven, I don’t know what it is.
0:12:05 But your ability as a young person,
0:12:07 your brain is more agile, more neuroplastic,
0:12:10 whatever the term is to absorb new technologies
0:12:12 and then apply them or cut a swath between technology
0:12:15 and creativity and be great at visual effects
0:12:18 and be more efficient.
0:12:20 I think that is a fantastic seat.
0:12:23 So, I’d just be careful.
0:12:24 I think a lot of young people think,
0:12:26 “Well, I’m not loving my job or I find it difficult.”
0:12:29 Well, there’s a word for that, work.
0:12:31 And I don’t care how romantic the industry is.
0:12:33 If you’re gonna be good at something and really,
0:12:35 I think there’s just a ton of stress and work involved.
0:12:38 And it sounds to me like you found a good seat for yourself.
0:12:42 So, how do you balance both?
0:12:44 I don’t know, boss, I hate the word balance.
0:12:46 I think at the age of 24, this is what I would do
0:12:48 if I were you and I were blessed with a career
0:12:51 that it sounds like you’re pretty good at
0:12:53 and that is growing or I think visual effects
0:12:56 are gonna grow.
0:12:57 Just one quick side note,
0:12:59 design media for a smaller screen.
0:13:02 You don’t wanna be in the movie effects business.
0:13:03 The movie business is gonna get smaller and smaller.
0:13:05 The TV business is gonna be fine.
0:13:07 It’s gonna be a huge business but it’s not gonna grow.
0:13:09 But if you can be great at capturing people’s imagination
0:13:12 with effects or figure out a way to do things
0:13:14 for the small screen, specifically the phone,
0:13:16 that is champagne and cocaine.
0:13:18 Anyways, be the guy that really understands
0:13:21 the intersection between creativity, storytelling
0:13:23 and technology but it sounds to me, Ryan,
0:13:24 like you’re in a pretty good seat.
0:13:27 And also, don’t be hard on yourself.
0:13:28 Recognize that at the age of 24,
0:13:30 the majority of people have no fucking idea
0:13:31 what they wanna do.
0:13:32 You know what I was doing at 24?
0:13:34 I was deciding not to stay in investment banking
0:13:36 and moving back in with my mom
0:13:38 and I had absolutely no idea what I wanted to do
0:13:40 with my life and then with my best friend
0:13:41 and my girlfriend said they were applying
0:13:43 to business school and I go,
0:13:44 “I’ll apply to business school then.”
0:13:46 With a 2.27 GPA from UCLA, I applied to business school.
0:13:49 Go figure, Ryan, definitely be that guy
0:13:51 who understands the intersection
0:13:53 of technology, creativity and storytelling.
0:13:56 Thanks for the question, Ryan.
0:13:58 We have one quick break before our final question.
0:13:59 Stay with us.
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0:14:08 Even the most hardcore of us need to kick back
0:14:10 and chill every now and then.
0:14:11 But if you’re an investor,
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0:15:17 So you want to learn a new language?
0:15:18 Great, you have a few options.
0:15:20 You can uproot your life and move some more far away
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0:15:24 but I’m guessing that’s not on the cards for you.
0:15:26 You could hire a private tutor,
0:15:28 but that’s going to cost you several hundred bucks,
0:15:30 or you could try a language app,
0:15:32 but not all language apps are created equal.
0:15:34 So you might want to try Babbel.
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0:15:46 Instead, their lessons were developed
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0:15:50 focused on teaching phrases and vocabulary
0:15:52 you can actually use.
0:15:54 One of our producers, Caroline, tried Babbel,
0:15:56 and she won’t stop speaking Italian.
0:15:59 It’s really annoying, but I guess that means
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0:16:24 Support for PropG comes from Fundrise.
0:16:33 You know the adage, buy low, sell high,
0:16:36 it’s easy to say, hard to do.
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0:17:13 (upbeat music)
0:17:16 – Welcome back, question number three.
0:17:21 – Hey Scott, this is Frank Paula from South Florida.
0:17:24 Just finished Algebra for Welk, loved it,
0:17:27 ended up sending it to both my 30 year old kids
0:17:30 with a couple of notations
0:17:31 on things they need to specifically look at.
0:17:33 What is a 65 year old business owner?
0:17:35 I’ll tell you a lot of stuff over in there.
0:17:37 Love the show and also love pivot.
0:17:39 Just listen to your last episode
0:17:41 talking about giving and the wonderful women in this world
0:17:45 that are doing it so kind-hearted,
0:17:47 you know, obviously so generously.
0:17:49 So my question’s around that.
0:17:51 You’re a charitable giver, you’ve mentioned that as well.
0:17:54 And I also believe that there’s no point
0:17:56 in kicking the stuff forward until the time I go
0:18:00 and giving it out there and working in the world.
0:18:03 Tell me a little bit about how you go about making decisions
0:18:06 with regards to the types of giving that you’ve done
0:18:09 now that you’ve kind of put away your chunk of change
0:18:11 that’s gonna support you through the balance of your life.
0:18:14 Again, love the show, looking forward to your answer.
0:18:17 – Brandt, thanks for the question.
0:18:18 First off, you sound like just such an impressive man.
0:18:21 You have a great voice, by the way.
0:18:22 You could have a second career in podcasting.
0:18:25 And this is what I call the mother of all good problems,
0:18:28 right, trying to figure out how to give away money
0:18:30 and what to do about it.
0:18:31 As a matter of, it’s interesting,
0:18:32 it is a bigger issue than people think.
0:18:33 UBS, I used to get invited every year
0:18:36 to this UBS generational wealth conference.
0:18:38 And basically it was a conference for rich kids.
0:18:40 So, think of the wealthiest names in the world.
0:18:44 You get to meet their kids
0:18:45 and I would talk about living a meaningful life.
0:18:49 I talk a little bit about brands and technology
0:18:52 and then they would spend an entire day on giving,
0:18:56 which I thought, I didn’t participate in it,
0:18:58 but I thought that was interesting
0:18:59 ’cause obviously wealthy people are very philanthropic.
0:19:03 I do think, and just to revisit what you referenced,
0:19:06 I do think there’s a virus in the United States of hoarding.
0:19:10 And that is, the problem with the numbers,
0:19:12 if you get to 10 million, you can imagine 30 million,
0:19:15 then you can imagine 100 million.
0:19:16 And because your life has consistently gotten better
0:19:19 along that scale as you increase your wealth,
0:19:21 you think that that scale is linear.
0:19:23 And that if you can get from 10 to 30 million,
0:19:25 your life’s gonna get three times as good.
0:19:27 And what Daniel Kahneman has shown us
0:19:28 is that the difference between zero and one million is huge.
0:19:31 The difference between one and 10 million is modest
0:19:33 and the difference between 10 and 50 million
0:19:35 is really negligible.
0:19:37 So, once you hit your number,
0:19:39 and a decent way to calculate your number
0:19:40 if you wanna be really conservative
0:19:42 is figure out how much money you need every year.
0:19:44 What is your burn?
0:19:45 Say you need a half a million dollars
0:19:47 to live really well a year, then times it by 25.
0:19:51 That means you would need 12 and a half million dollars
0:19:53 in savings and income.
0:19:55 Now, anything above that,
0:19:56 I think you could start thinking about giving away
0:19:59 or spending or going above that half a million dollars a year.
0:20:03 I’m a big spender, I like it.
0:20:05 Hey, big spender, I’m indulgent, I’m materialistic.
0:20:09 I love, I think I’m good at spending money.
0:20:11 You know what I hate?
0:20:11 I hate it when people who have money
0:20:13 can’t spend their money well.
0:20:14 I can’t tell you, speaking of Florida,
0:20:17 how many really wealthy people I know
0:20:18 and I go into their house, I’m like, ugh, my God.
0:20:21 I mean, fountains and stairways
0:20:23 and like shitty modern art
0:20:25 and pictures of themselves everywhere.
0:20:27 Oh, God.
0:20:28 I’m like, Jesus Christ,
0:20:30 can someone show these people how to spend their fucking money?
0:20:33 That’s not what you asked.
0:20:34 How do I approach giving?
0:20:35 I try to put it to something I’m passionate about
0:20:38 and I think I know something about
0:20:40 and then I want to change.
0:20:41 So my big thing is how men are struggling.
0:20:44 I have recently made a gift, if I think about,
0:20:47 14 or $15 million to the University of California,
0:20:50 Berkeley and UCLA for the development of programming
0:20:54 that’s more vocational,
0:20:55 that would have no entrance requirements,
0:20:57 not a traditional four year degree
0:20:58 that appeals to younger people, mostly younger men,
0:21:02 who no longer have access to wood shop, metal shop,
0:21:04 and auto shop that are thinking about specialty nursing
0:21:07 or construction or plumbing or electric
0:21:11 and can foot or can find skills that foot
0:21:14 to this enormous gap in the real economy
0:21:17 and that is the trades sector.
0:21:20 The trade sector is gonna lose five people
0:21:22 over the next 10 years for every two that go into it,
0:21:23 which means the cost of renovating
0:21:25 and having soapstone installed in your kitchen,
0:21:27 which I just had exceptionally expensive.
0:21:30 So those people are gonna have incredible pricing power.
0:21:32 Probably the biggest opportunity in our economy right now
0:21:35 is, in fact, to buy a trades business,
0:21:38 a small business, if you will.
0:21:39 Anyway, I’m passionate about that.
0:21:41 I really like the new chancellor
0:21:43 of the University of California, Berkeley, Rich Lyons,
0:21:45 he’s a wonderful guy, I’ve known him for 20 years,
0:21:47 so I trust him to deploy the capital prudently
0:21:51 and effectively, so that’s kind of my thing.
0:21:54 The other thing I’m passionate about
0:21:55 as it relates to young men is teen depression.
0:21:58 I’ve given a bunch of money to the Jed Foundation.
0:22:01 Is that fair?
0:22:02 I don’t know, get a couple hundred or 500 grand of them.
0:22:05 And then just a personal relationship.
0:22:07 I have a personal relationship with a kid named Scott Harrison
0:22:09 that I’ve known for 25 years
0:22:11 and he is building wells in sub-Saharan Africa.
0:22:14 Do I have a passion around water or people in Africa?
0:22:16 No, I’d probably rather give money to Americans.
0:22:19 I know if that sounds jingoistic, trust your instincts,
0:22:21 but I’m so inspired by Scott and him
0:22:24 and his personal story that I feel a friendship,
0:22:27 a kinship with him, so I wanna be supportive
0:22:30 of his amazing charity, charity water,
0:22:33 and he runs it so well that I’m confident
0:22:35 my money will be put to good use.
0:22:37 So how do I do it?
0:22:38 I find things that foot to my passions
0:22:40 are things I think are really important
0:22:43 that I have a specific interest in,
0:22:45 but let me finish where I started.
0:22:47 This is a great problem.
0:22:49 Congratulations on your success.
0:22:51 And I think it’s very American
0:22:53 to be thinking the way you’re thinking.
0:22:55 That’s all for this episode.
0:22:58 If you’d like to submit a question,
0:22:59 please email a voice recording
0:23:00 to officehours@proptimedia.com.
0:23:02 Again, that’s officehours@proptimedia.com.
0:23:05 This episode was produced by Caroline Shagren.
0:23:16 Jennifer Sanchez is our associate producer,
0:23:18 and Drew Burroughs is our technical director.
0:23:20 Thank you for listening to “The Propti Pop”
0:23:22 from the Vox Media Podcast Network.
0:23:24 We will catch you on Saturday for “No Mercy, No Malice”
0:23:26 as read by George Hahn.
0:23:28 And please follow our Propti Markets Pod
0:23:31 wherever you get your pods for new episodes
0:23:33 every Monday and Thursday.
0:23:34 By the way, our Propti Markets Pod
0:23:37 is already the number one pod in business in America.

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0:01:54 (upbeat music)
0:01:57 – Today’s number 19, that’s the percentage of employers
0:02:00 who claim to have had a recent college graduate
0:02:02 bring a, get this, parent to a job interview.
0:02:05 Ed, true story.
0:02:06 I figured out that my parents favored my twin brother
0:02:09 when they asked me to blow up balloons
0:02:11 for his surprise birthday party.
0:02:12 (laughing)
0:02:14 (upbeat music)
0:02:16 (upbeat music)
0:02:19 – Hold me Ed, little twin humor.
0:02:27 Little twin neglected dog humor.
0:02:29 That’s right, we’re trying to clean it up.
0:02:31 Still PG-13, still PG-13.
0:02:34 Welcome to Prop G Markets.
0:02:35 Today, we’re discussing the Texas Stock Exchange
0:02:39 and the dying breed of the short seller.
0:02:42 Here with the news is Prop G Media Analyst, Ed Elson.
0:02:46 – Ed, what is the good word?
0:02:47 – I’m just pretty shocked by that start, 19%.
0:02:50 – Makes no fucking sense.
0:02:51 – Makes no way, do you think that’s right?
0:02:53 – I don’t know.
0:02:53 – Surely there was something wrong with the survey there,
0:02:57 unless I’m just completely out of touch, it’s unbelievable.
0:02:59 – Yeah, no.
0:03:01 I asked my parents if I was in an accident,
0:03:02 and they said, “No, it’s really more of a tragedy.”
0:03:05 (laughing)
0:03:06 – That could have been our opening joke too.
0:03:08 – Yeah, there you go.
0:03:09 – You were in Scotland yesterday, how was that?
0:03:11 – And this morning, it was great.
0:03:12 Went up there for the night to a place called
0:03:15 Five Arms in Aberdeen.
0:03:17 – By the way, one of my favorite things to do
0:03:18 is when I look at your schedule,
0:03:20 I will look at the hotels you’re staying at
0:03:23 and Google them and look at all the photos.
0:03:26 So I’ve already seen the Five Arms website.
0:03:29 I know what all the amenities are.
0:03:31 Looks quite nice, yeah.
0:03:32 – Yeah, what do you think?
0:03:33 What should we have done?
0:03:34 We pretty much just drank whiskey and had a long dinner.
0:03:37 We didn’t even take a walk, we’re gonna go outside.
0:03:39 Also, I don’t know if I told you this,
0:03:40 but actually, speaking of parents,
0:03:41 my parents treat me like a god,
0:03:43 and that is they don’t believe in me, Ed.
0:03:44 They don’t believe in me.
0:03:46 Back to the Five Arms.
0:03:48 – Do you have like a joke’s website pulled up
0:03:51 in front of you right now?
0:03:52 Where are these coming from?
0:03:53 – 100%.
0:03:54 So what place am I going to that you’re most excited about?
0:03:57 I love that you’re stalking me.
0:03:58 – I love doing that.
0:03:59 I don’t know, I…
0:04:02 – First off, where are you guys going?
0:04:03 Where’s the team going?
0:04:05 – Oh, we’re going to St. Bart’s.
0:04:06 – That’s right.
0:04:07 That’s what happens when you work for the dog.
0:04:08 – That’s right.
0:04:09 – That’s right, he sends you the same bar.
0:04:10 So I tell you, once I walked in on my parents having sex,
0:04:13 seriously, Ed, seriously, I’m not joking.
0:04:16 It was the worst 45 minutes in my life.
0:04:18 – You’ve told that one before, but yeah.
0:04:23 – Never get told.
0:04:24 – And just a reminder, just a reminder,
0:04:27 just a reminder to go listen to the ProfG Markets Feed,
0:04:32 ProfG Markets, go subscribe.
0:04:35 – All right, get to the news.
0:04:36 – Gladly.
0:04:36 – Get to the news.
0:04:38 – Let’s start with our weekly review of market vitals.
0:04:40 (upbeat music)
0:04:43 The S&P 500 hit a new record, the dollar declined,
0:04:50 Bitcoin top $70,000 and the yield on 10-year treasuries fell.
0:04:55 Shifting to the headlines.
0:04:56 Spotify is increasing the cost
0:04:58 of its premium subscription plans,
0:05:00 including the family duo and student plans.
0:05:02 That’s its second price hike in a year.
0:05:05 Meanwhile, Warner Brothers Discovery
0:05:06 also announced a price hike for Max.
0:05:09 Morgan Stanley’s trading platform, eTrade,
0:05:12 is considering banning Keith Gill,
0:05:14 also known as Roaring Kitty,
0:05:15 over concerns of potential stock manipulation.
0:05:18 The company is concerned that Gill’s influence
0:05:20 can enable him to pump up stocks like GameStop
0:05:23 for his own gain.
0:05:25 And finally, Nvidia became the first computer chip company
0:05:27 ever to reach a market cap of wait for it $3 trillion.
0:05:32 As of Wednesday’s close,
0:05:34 the company surpassed Apple
0:05:35 as the second most valuable company in the S&P 500,
0:05:38 also in the world, behind only Microsoft.
0:05:41 Scott, your thoughts?
0:05:43 – I think that the subscription space
0:05:45 is just such a fascinating lesson
0:05:48 in economics and markets.
0:05:49 And essentially what you had is everyone figured out
0:05:51 that the future is in streaming.
0:05:53 And it’s also consistent revenue.
0:05:56 It’s not ad revenues where if there’s a recession,
0:05:58 everyone stops advertising.
0:05:59 Even though it was a recession,
0:06:00 people usually don’t cancel their Netflix or their Spotify.
0:06:03 And so the market got drunk on it.
0:06:06 This is the future and gave these companies
0:06:07 an enormous valuations.
0:06:09 And then the ones with the biggest market cap,
0:06:11 specifically Netflix,
0:06:13 started reinvesting that capital
0:06:14 to take an Amazon-like strategy
0:06:16 of just using capital as a weapon
0:06:17 and pull away from everyone else.
0:06:19 And Netflix got up to $17 billion a year
0:06:22 and spend on content, which no one could match.
0:06:25 And then the markets got less excited about the space
0:06:29 ’cause it didn’t appear anyone was very profitable
0:06:31 and that the space had been over-invested
0:06:34 ’cause everyone was trying to catch up with Netflix.
0:06:36 So it was a great time to be a gaffer.
0:06:37 It was a great time to be in the business of production.
0:06:41 But at some point the music was gonna end.
0:06:43 And it ended about, I think about two years ago
0:06:45 when Netflix crashed and all of a sudden became clear
0:06:48 that things like Paramount Plus just might not survive.
0:06:52 And the market has done two things.
0:06:53 It’s consolidated and it’s also based on the consolidation
0:06:57 given some players, specifically Netflix,
0:06:59 the cloud cover to raise prices.
0:07:02 And this cloud cover and the consolidation
0:07:04 ’cause there’s fewer and fewer options
0:07:06 at the very high levels has given this pricing power
0:07:10 back to the organizations and Spotify has increased prices.
0:07:14 I think it’s gonna be twice now
0:07:15 and Spotify for the first time,
0:07:18 I think in a while their stock is performing really well.
0:07:21 The individual, dual and family subscriptions
0:07:23 will increase one, two and $3 respectively.
0:07:25 The stock popped 5% on the news.
0:07:28 Its performance to date has been underwhelming
0:07:30 and it’s 25 quarters as a public company.
0:07:32 It’s only been profitable of eight of them
0:07:34 but things are looking up.
0:07:35 Stocks has doubled in the last 12 months
0:07:38 and you’re also seeing max is increasing
0:07:40 its prices on ad-free plans.
0:07:42 So the companies that come out the other end of this
0:07:44 it will be the Consolidate Ores
0:07:46 as opposed to the Consolidate Ease.
0:07:48 I think it’ll do well.
0:07:49 And that’s one of the reasons our three stock picks for 25,
0:07:53 again, invest in index funds,
0:07:54 but it’s fun to follow stocks are Alphabet,
0:07:58 which is up I think 25 or 26% on the year.
0:08:00 And then Warner Brothers and Disney
0:08:02 and Warner Brothers has been a laggard,
0:08:03 Disney’s done okay because I think that the pricing power
0:08:07 that they will register at Disney Plus
0:08:08 and at HBO respectively,
0:08:11 will start to give the markets a reason to look at them again.
0:08:13 But this is just a case study in overinvestment
0:08:18 and then a crash and then consolidation
0:08:20 and then pricing power coming back.
0:08:22 Any thoughts?
0:08:23 – I just couldn’t believe the stock performance of Spotify.
0:08:25 It’s 110% in the past year, it’s doubled.
0:08:28 It’s just pretty fascinating to me.
0:08:30 I mean, we discussed their earnings from last quarter
0:08:34 on this podcast, which was also pretty phenomenal.
0:08:36 20% revenue growth.
0:08:38 They had this massive reduction in spending.
0:08:40 And now they’re doing what great companies get to do,
0:08:44 which is raise prices.
0:08:45 So I will see how that will affect the usership
0:08:49 in the next earnings.
0:08:49 It’s got its next earnings call a month from now,
0:08:52 but I have a feeling that it’s not really gonna hurt.
0:08:55 MA use that much.
0:08:56 I feel like price hikes are always less damaging
0:08:59 than people predict and that’s certainly been the case
0:09:01 for Netflix as you pointed out.
0:09:03 Thoughts on Keith Gill and eTrade.
0:09:06 – So I thought this was really interesting.
0:09:07 When we first talked about it in the editorial meeting,
0:09:09 I thought, this is bullshit.
0:09:11 You know, it’s the SEC’s job to decide
0:09:13 what market manipulation is, not eTrade.
0:09:15 And then it dawned on me, eTrade is full of shit.
0:09:19 This is what’s going on or what I think is going on.
0:09:21 eTrade is worried about what happened to Robinhood.
0:09:25 And that is when the meme stock phenomenon
0:09:27 went just literally parabolic.
0:09:30 The ability to pair trades on these highly risky,
0:09:33 highly volatile stocks meant that the trading
0:09:35 or the clearing firms asked them to have a certain amount
0:09:38 of capital reserved in case the stock accelerated
0:09:42 before they paired it with another trade.
0:09:44 And I think eTrade is worried
0:09:46 that they might get caught with their pants down.
0:09:48 Cause if you remember what happened to Robinhood,
0:09:50 they effectively said to people, you cannot buy GameStop
0:09:55 or I forget which equity it is.
0:09:56 And to a certain extent, they probably should have gone
0:09:58 out of business when they did that.
0:10:01 And I think eTrade looks at what’s happening
0:10:03 and says someone in their compliance
0:10:05 or the risk department comes back and goes,
0:10:07 if this shit gets real again
0:10:08 and it starts going fucking crazy,
0:10:10 we could potentially find ourselves
0:10:12 in a Robinhood-like position where the people
0:10:14 who clear our trades demand so much equity
0:10:18 that we don’t have it.
0:10:20 But this notion somehow that they have decided
0:10:22 they’re the arbiters of market manipulation
0:10:24 makes absolutely no sense to me.
0:10:27 What are your thoughts?
0:10:28 – Yeah, I found it really interesting,
0:10:30 the debate that’s going on at Morgan Stanley
0:10:31 as you pointed out why they should ban him,
0:10:34 but also why they shouldn’t ban him.
0:10:37 Because it actually isn’t a question of legality for them
0:10:40 because their terms and conditions are very clear.
0:10:42 They can basically restrict whoever they want.
0:10:45 That’s what you sign up for
0:10:46 when you sign up with their platform.
0:10:48 But their concern is that if they do ban him,
0:10:52 that they’re gonna make enemies with the Reddit army
0:10:55 and that by antagonizing him,
0:10:57 it’s gonna start this chain reaction
0:10:59 and all of his hundreds of thousands of fans
0:11:01 are gonna leave and follow him to a different platform.
0:11:05 And I just find it so interesting
0:11:06 that this issue is kind of becoming a theme
0:11:09 for every platform.
0:11:11 And the first obvious example
0:11:12 that comes to mind is Trump.
0:11:14 But it’s sort of like, if you’re a platform,
0:11:17 if you have users, you have to develop a strategy
0:11:20 for dealing with these larger than life characters
0:11:23 with these huge followings who misbehave.
0:11:26 Because even if you rightly punish them,
0:11:29 you risk losing millions of users
0:11:31 and eventually probably millions in revenue.
0:11:34 So it’s interesting to me that a stock trading platform
0:11:37 could be dealing with the same issues
0:11:39 that we’ve seen over and over again
0:11:41 on the social media platforms like Twitter and Facebook.
0:11:44 And I just think that every platform,
0:11:46 no matter what industry you’re in,
0:11:48 should have a game plan for situations like this
0:11:51 because it feels like it’s happening
0:11:52 more and more frequently.
0:11:54 – Your analysis is the right one.
0:11:55 But the folks at Morgan Stanley are really smart
0:11:58 and they sat down and said,
0:11:59 okay, what are the risks of a Robin Hood-like moment for us?
0:12:03 That is a terrible scenario for us.
0:12:06 What are the risks we’re gonna lose
0:12:07 a bunch of meme stock traders?
0:12:09 They probably looked at their,
0:12:10 I would imagine their trading base
0:12:11 and said, it’s not a big part of our business.
0:12:14 I think they would have rather not done this,
0:12:16 all things being equal.
0:12:17 But I think they decided the risk,
0:12:19 the kind of tail risk or the black swan risk
0:12:23 of an event where the stock goes to,
0:12:26 one of these meme stocks goes absolutely parabolic
0:12:29 and there’s just a 30, 50, 100 X increase in volume.
0:12:33 And all of a sudden,
0:12:34 the people clearing their trades freak out
0:12:35 and say, you need 30, 40 X the capital reserves here.
0:12:39 They thought, okay, that’s just not a scenario
0:12:42 where we all wanna be woken up at 2 a.m.
0:12:43 and try to figure out how to get more liquidity.
0:12:46 Okay, so we piss off Roaring Kitty
0:12:49 and his followers or some people on Reddit.
0:12:52 They probably did some analysis
0:12:53 and tried to figure out what percentage
0:12:55 of our trading volume is these individuals.
0:12:58 And they said, no,
0:12:59 we’d rather piss off this small group of people
0:13:02 and not be subject to this tail risk.
0:13:05 Thoughts on NVIDIA to $3 trillion in market cap.
0:13:09 I just never been accompanied this successful.
0:13:12 If you define success by the ability
0:13:14 to add that type of value in a short period of time,
0:13:17 it’s added $1.8 trillion year to date.
0:13:21 It added three quarters of a trillion dollars in May.
0:13:24 So it’s now larger than the entire stock markets
0:13:27 of Canada and South Korea.
0:13:29 It’s market cap is larger than the GDPs
0:13:32 of all but six countries.
0:13:33 I mean, we were talking with Bill Cohen about Paramount.
0:13:36 We’re talking about $5 billion is worth $15 billion.
0:13:38 You know, this company loses that in a trading hour,
0:13:40 gains it and it’s absolutely striking.
0:13:45 And we’re gonna see all sorts of stories here
0:13:46 about thousands of employees in the Bay Area
0:13:49 who are now worth $10, $50, $100 million.
0:13:52 The numbers here, people can’t even wrap their head
0:13:54 around what the numbers here are.
0:13:57 And then one of the things that me have pulled up
0:13:59 that just fascinates me is I believe
0:14:02 that the S&P is up about 13 or 14% year to date,
0:14:06 but half of that gain is NVIDIA.
0:14:11 So the S&P outside of NVIDIA
0:14:14 is basically up a little bit more than inflation.
0:14:17 So essentially, if you have money in the S&P,
0:14:19 you’re kind of flat if you don’t own NVIDIA.
0:14:22 But if you own NVIDIA or you’re part of an index fund,
0:14:25 and this is why you should be in an index fund
0:14:26 because you’re balanced across based on a weighted adjusted
0:14:31 ratio of the market cap, you’re up 14%.
0:14:35 But if you’re buying individual stocks, most likely,
0:14:38 you’re probably not doing that well
0:14:40 unless one of those stocks was NVIDIA.
0:14:42 And it goes back to, I think it’s a lesson
0:14:44 in the power of index investing
0:14:46 because what I have found,
0:14:48 having been through a lot of ups and downs financially,
0:14:51 is that the pain of losing a lot of money
0:14:55 is much greater than the joy of making a lot of money.
0:14:58 And so diversification and index funds
0:15:02 and getting that 14% feels really good.
0:15:06 Now, it doesn’t feel as awesome as getting 300%,
0:15:09 but what really fucking sucks is being the guy
0:15:11 that’s not beating inflation or has lost money.
0:15:15 So this thing is an absolute phenomena.
0:15:19 Josh Brown had a really interesting point.
0:15:21 I said, “This is Cisco all over again.”
0:15:22 He said, “Yeah, there’s a key distinction though.”
0:15:24 And that is, as the market cap has accelerated,
0:15:27 the PE has actually come down,
0:15:29 which means that their earnings growth has been greater
0:15:31 than this exponential market capitalization growth.
0:15:35 I think this is a bubble.
0:15:36 I think it’s a matter of when, not if,
0:15:39 but I think it’s gonna happen when a company,
0:15:42 a big company who’s a big purchaser,
0:15:45 announces they have their own ship
0:15:48 and that it’s pretty good.
0:15:49 Or when, you know, Mary Barra from General Motors says,
0:15:53 “We’re dramatically decreasing our spend in AI
0:15:55 “while it’s still important to us.
0:15:57 “We’ve realized that it’s not gonna revolutionize
0:15:59 “everything we’ve done.”
0:16:00 And that’s when I think you see the bubble pop here.
0:16:02 But this is, as of today,
0:16:04 this is the most successful company in history
0:16:07 as registered by an acceleration in value.
0:16:09 What are your thoughts?
0:16:10 – I just love seeing the star power
0:16:13 that Jensen Huang has accumulated in the past year.
0:16:16 Two awesome examples of that.
0:16:18 One, that viral photo of Jensen signing a woman’s shirt
0:16:23 who comes and it costs him
0:16:25 while he’s walking out of an interview.
0:16:26 If you haven’t seen it yet, you should go check it out.
0:16:29 He literally looks like a rock star.
0:16:31 I mean, he’s wearing the leather jacket,
0:16:33 but it’s sort of like,
0:16:34 it’s Cristiano Ronaldo, like Justin Bieber level fame.
0:16:39 And the second thing that I found also pretty interesting
0:16:42 is what he did to Samsung stock.
0:16:44 And that is Samsung rose 4% in one day
0:16:48 after Jensen said in an interview
0:16:50 not that he was partnering with Samsung
0:16:53 or that he was even conducting
0:16:54 any sort of business with Samsung.
0:16:56 All he said is that he has been looking
0:16:59 at the chips that Samsung has been producing.
0:17:02 And through that comment alone,
0:17:04 he was able to create $15 billion in market value
0:17:08 and increase the stock 4%.
0:17:11 Here’s a question for you.
0:17:13 Do you think Jensen Huang is at this point
0:17:15 the most powerful non-politician in the world?
0:17:17 – It’s a really interesting question.
0:17:18 I think some people would argue that it’s
0:17:21 Mark Zuckerberg or Sachin Adela
0:17:23 because of their control over such huge swaths,
0:17:25 huge businesses and also their ability to sway elections
0:17:28 or not sway elections or depress teens
0:17:30 or whatever it is they do.
0:17:32 But what Jensen in my opinion sort of indicates
0:17:36 is the financialization of everything.
0:17:38 As a society becomes more capitalist,
0:17:40 what it offers is different gradients of life.
0:17:43 What do I mean by that?
0:17:45 When I was younger, my dad would have people over
0:17:49 who work for him.
0:17:50 And then we would occasionally go over to his boss’s house.
0:17:53 His boss had the nicest house on the block,
0:17:56 but it was still the same neighborhood.
0:17:57 And we were all still members of the same country club.
0:17:59 And he had a Cadillac, right?
0:18:01 Instead of a Thunderbird, he had a Cadillac.
0:18:02 My dad had a Gran Torino, but his boss had a Cadillac.
0:18:05 But now the guy who runs a company flies private
0:18:11 and stays at a series of hotels that people just,
0:18:15 most 99% of people could just never even afford.
0:18:17 – The five owns, yeah.
0:18:19 – Well, not even that.
0:18:20 I mean, what you can do with money now,
0:18:23 that wasn’t even an option back in the 70s and 80s.
0:18:27 Like money bought you some stuff,
0:18:28 but it didn’t buy you what it buys you today.
0:18:31 And so I think the reason we’re morphing
0:18:33 to a different species is one,
0:18:34 mostly because of loneliness,
0:18:35 but two, the financialization of everything
0:18:37 has created different criteria.
0:18:38 What do I mean by that?
0:18:40 The sex symbols used to be military.
0:18:43 Your ability to protect the tribe
0:18:45 made people attracted to you.
0:18:47 Now, the people we’re most attracted to
0:18:50 are the people who can offer a better life
0:18:52 to the entire tribe.
0:18:53 And that is if you’re very wealthy,
0:18:55 you have power, a ton of power,
0:18:57 and you can offer such an extraordinarily different life
0:19:00 to not only your immediate family,
0:19:01 but the people around you, your employees,
0:19:03 that these people have become the new generals,
0:19:06 the new athletes, the new movie stars.
0:19:09 They are the sex symbols.
0:19:11 They are the new heroes in a species that has evolved.
0:19:16 Also, because they’re in the technology field,
0:19:18 they’re the closest thing we have to a God,
0:19:19 ’cause we don’t understand this shit,
0:19:21 similar to the way we don’t understand religion.
0:19:23 But I feel like we’re evolving to a different species
0:19:27 with different criteria and different heroes.
0:19:29 And Jensen Huang is an example of that.
0:19:31 And here’s our strategy.
0:19:33 I did get that picture with him at Cannes, he came up,
0:19:35 I told you this story, said, “I like your videos.”
0:19:37 I’m like, “Do you want a picture?”
0:19:38 I thought he was a fan, took a picture, he walked away.
0:19:41 I’m gonna find that picture.
0:19:43 And I’m going to announce that Prop G
0:19:45 has entered into an exclusive relationship with Nvidia,
0:19:48 and then we’re gonna spack.
0:19:50 We’re gonna spack.
0:19:51 Hell yeah, I love that.
0:19:52 We’re gonna spack.
0:19:53 I’m gonna get Chamath as an investor,
0:19:55 I haven’t go on CNBC every other fucking day,
0:19:57 and they’re gonna pretend what he says is gold,
0:20:01 so they can fill up 18 hours of opioid-induced
0:20:03 constipation network, and they’ll bring on
0:20:06 any carnival barker to talk up any chicken shit.
0:20:08 I love that.
0:20:09 We’ll be right back after the break
0:20:12 with a look at the Texas Stock Exchange.
0:20:15 (gentle music)
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0:23:54 We’re back with PropG Markets.
0:24:04 A new national stock exchange is preparing
0:24:06 to set up shop in Texas.
0:24:08 A group of investors including BlackRock and Citadel
0:24:11 have raised $120 million to establish an alternative
0:24:15 to the New York Stock Exchange and the NASDAQ.
0:24:17 Those exchanges, according to the group, are too regulated.
0:24:21 The Texas Stock Exchange plans to file
0:24:23 with the SEC later this year
0:24:25 and it wants to start trading in 2025.
0:24:28 Scott, the NYSE and the NASDAQ have had this duopoly
0:24:33 on the US stock market for years now.
0:24:36 How do you think the Texas Stock Exchange
0:24:38 could affect the financial markets?
0:24:40 Well, I like this in the sense
0:24:41 that I think we need more competition.
0:24:44 I just think it’s a good idea to have more than two options
0:24:47 in what is the largest equity market in the world.
0:24:49 The US markets trade more than $360 billion in value each day
0:24:53 and that’s more than four times the liquidity
0:24:57 of all European markets combined.
0:24:59 So they are, it really is at this point,
0:25:00 a bit of a duopoly and then what you see
0:25:04 is because that the criteria and the risk disclosure
0:25:08 that the SEC mandates to trade on these exchanges
0:25:10 results in a series of companies
0:25:12 that have a halo of prestige.
0:25:15 That if you’re a publicly traded company
0:25:16 on the NYSE or NASDAQ, it says something about you.
0:25:19 It’s like going to Princeton, for example.
0:25:21 It says that you’re smart, you’re probably mentally fit
0:25:24 and probably an entitled douchebag.
0:25:27 But still, despite this, the average PE in London is 13.
0:25:32 The average PE on the Shanghai index is 13 also
0:25:36 and New York City, it’s 26X.
0:25:39 That’s the combined or the average PE affirms
0:25:42 on the NYSE or the NASDAQ.
0:25:44 So these companies offer an incredible brand halo
0:25:49 and they also get paid for it.
0:25:51 So the minimum fee to the exchange for listed companies
0:25:54 in London is 14,000 and Frankfurt is 17.
0:25:57 And here’s the duopoly gets their pricing power.
0:25:59 The NASDAQ and the NYSE are 52 and 80,000 respectively.
0:26:04 So I like competition.
0:26:06 The thing I don’t like about this is, of course,
0:26:09 this is the politicization of everything.
0:26:11 This has very much a red state feel
0:26:13 and they’re trying to say NYSE and NASDAQ are blue state
0:26:15 and I thought, God, I never thought of them as blue.
0:26:17 I just thought of them as financial.
0:26:19 But it feels like everything is being politicized, right?
0:26:22 Just as we were talking about the financialization
0:26:23 of everything, we have the politicization of everything.
0:26:26 And I would bet, I would bet that the person
0:26:29 behind all of this who said I’ll be your anchor tenant
0:26:33 is Elon Musk.
0:26:34 I think he’s so pissed off about what’s happened
0:26:37 with the SEC and his pay package.
0:26:39 I bet he can’t wait to move all of his shit
0:26:43 and trade on the Texas, whatever it’s gonna call,
0:26:46 the Yeehaw Stock Exchange or the Texas Stock Exchange.
0:26:50 So it’s sort of discouraging that my guess is
0:26:53 intentionally or not, they’re gonna position it
0:26:55 as red state versus blue state.
0:26:57 What are your thoughts?
0:26:58 – Well, I think it’s interesting to go over
0:26:59 what the complaints about the NASDAQ
0:27:02 and the New York Stock Exchange actually are.
0:27:05 So there have been complaints about costs,
0:27:07 particularly costs around trading data access
0:27:11 and financial data, but that’s mostly an investor complaint.
0:27:15 It’s less of an issue for a company listing itself.
0:27:19 And there’s obviously the listing fees
0:27:21 and the annual fees, but those numbers are pretty small.
0:27:24 There’s also been complaints around regulatory overreach,
0:27:27 just that there are too many rules
0:27:29 and too many regulations for both exchanges
0:27:31 if you wanna list.
0:27:32 But the most common complaint that I’m seeing,
0:27:36 and this is what I find so interesting about this story,
0:27:38 is that both exchanges are too woke.
0:27:42 Like every written opinion on this topic,
0:27:45 there’s this one fact that they love to talk about,
0:27:47 which is that the NASDAQ has these rules
0:27:49 around board diversity.
0:27:51 And the rules are that one,
0:27:54 your board has to have at least one female director.
0:27:58 And two, your board must have at least one non-white
0:28:02 or LGBTQ plus director.
0:28:06 I think those rules are ridiculous personally,
0:28:09 but I also find it pretty ridiculous
0:28:11 that you would go out and create an entirely new exchange,
0:28:15 basically just despite these other exchanges
0:28:17 that you think have become too woke.
0:28:20 – So I agree with you.
0:28:21 I’m not, I think it’s important to have a board that looks,
0:28:26 that at least has somewhat representative
0:28:30 of your customer base and your employee base,
0:28:32 but the exchange is mandating it.
0:28:34 I just don’t think they should be in that business.
0:28:36 I don’t, no one charged the NYSE or NASDAQ
0:28:39 with social engineering or solving the world’s,
0:28:42 you know, diversity problems.
0:28:43 I don’t think that’s the business they’re in.
0:28:44 I think it’s a lot of virtue signaling.
0:28:46 And I think investors can make up their own minds.
0:28:49 So they have kind of created an opportunity or wide space,
0:28:54 but they’ll also have lower or less stringent disclosure
0:28:58 or filing mandates.
0:29:00 This will be more like, we’re a market maker
0:29:02 and we’re in the business, we’re gonna be more,
0:29:04 they’re gonna, they’re not going after investors,
0:29:07 they’re going after investors on the woke shit,
0:29:08 which is, you know, I don’t know, what a fine,
0:29:11 but who they’re really going after is companies
0:29:13 by saying that we’re gonna make it less expensive
0:29:15 and less onerous for you to list on this exchange.
0:29:18 And then they’ll say to consumers,
0:29:20 I just smell musk here.
0:29:23 – Yeah, right? – I smell musk here.
0:29:25 I think Tesla and SpaceX and I think then Twitter or X,
0:29:29 whatever it’s called, are gonna end up on this exchange.
0:29:32 And then some of the politicians in Texas
0:29:35 will urge companies to relist on this exchange.
0:29:39 It’ll be a state thing like Texas and New York,
0:29:42 we hate each other, we’ll stop sending money to New York.
0:29:45 – Yeah, I mean, you mentioned like fees,
0:29:48 that fee that you mentioned before,
0:29:51 $80,000 to annual fee to be on the New York Stock Exchange.
0:29:56 Like that’s nothing, like I just can’t see
0:29:59 the value proposition here being anything,
0:30:02 but screw the woke liberals.
0:30:05 – Yeah, but as someone who has,
0:30:08 I didn’t run a public company,
0:30:10 but I founded a public company.
0:30:12 I think that, what did I think?
0:30:14 I think it was like, I think we figured out
0:30:16 to be public costs, two to three million bucks a year.
0:30:19 In terms of the accounts you’ve got to hire,
0:30:23 the audit requirements, the filings,
0:30:26 it’s real, it’s real cabbage.
0:30:31 And my guess is they’re gonna try and say to businesses,
0:30:34 we’re much lower cost, not only on the fee.
0:30:37 – Yeah, with the regulations.
0:30:38 You know, they’re just,
0:30:39 they’re gonna try and position themselves
0:30:41 as more business friendly on the supply side
0:30:44 and on the demand side to consumers, you know, we’re Texas.
0:30:49 – I think this story also plays into a larger
0:30:52 economic story about Texas.
0:30:54 And that is businesses just love Texas right now.
0:30:58 Just some stats on that.
0:30:59 It’s one of the leading states
0:31:00 in terms of business relocation.
0:31:02 And Texas is now tied with New York
0:31:05 for having the second highest number of S&P 500 companies
0:31:08 in the state.
0:31:09 They’re both just behind California.
0:31:11 – That’s a great stat.
0:31:12 – That includes old companies like Exxon and AT&T,
0:31:15 also new players like Tesla and Oracle.
0:31:19 GDP growth was 5.7% last year.
0:31:21 That’s the second highest in the nation.
0:31:23 And then of course, there’s this Texas
0:31:26 versus Delaware story that’s playing out
0:31:28 where Elon wants to reincorporate Tesla in Texas.
0:31:32 Instead of Delaware, he’s encouraging all these other
0:31:33 companies to do the same.
0:31:37 – What are your thoughts on Texas
0:31:39 and just the possibility that it could lead the US
0:31:42 in terms of business activity?
0:31:44 – I think Texas is fantastic.
0:31:45 I think it’s done a great job.
0:31:47 I can’t stand it when people create a stereotype
0:31:49 around Texas as being this kind of Republican.
0:31:52 I mean, Austin’s an amazing city
0:31:54 and it’s attracting a ton of business.
0:31:55 And it’s really, it’s a progressive place.
0:31:58 Houston’s a decent city.
0:32:00 Dallas, I mean, Dallas, one of the things
0:32:03 I was just so moved by is that I have a friend
0:32:06 whose daughter is severely disabled
0:32:10 and they moved to Dallas because Dallas
0:32:13 has developed an enormous infrastructure
0:32:16 of nonprofits and healthcare companies
0:32:20 and public infrastructure that is specifically focused
0:32:23 on kids with severe disabilities.
0:32:26 And you just immediately go like, fuck, yeah.
0:32:28 I mean, right on Texas, right?
0:32:30 – That’s awesome.
0:32:31 – And that it’s so strong.
0:32:33 And it has such a reputation for this
0:32:35 that a lot of people with kids who are struggling
0:32:38 move to Dallas.
0:32:40 And also, you know, all the stereotypes
0:32:43 about it being just a bunch of, you know,
0:32:45 white, good old boys and cowboy hats.
0:32:46 There’s a huge Indian population.
0:32:49 It’s a wonderful state.
0:32:51 I love that they’re offering zero taxes,
0:32:53 which forces other cities to take a really close look
0:32:56 at at least their state taxes.
0:32:58 A lot of people would argue in terms of consumption taxes,
0:33:00 it’s actually a middle to upper tax state.
0:33:03 That’s a different talk show.
0:33:05 Actually, Texas effective tax rate on businesses is 5.4%.
0:33:08 That’s the 14th highest nationally.
0:33:10 But their headline news is zero state income tax.
0:33:15 – Will Prof. G move to Texas?
0:33:16 – I don’t think I will ever live in Texas
0:33:18 because I don’t need to.
0:33:19 I get to live in New York and London,
0:33:23 which so it’s like, yeah, I mean, you know,
0:33:25 that works for you.
0:33:26 That’s a good idea for you, Ed.
0:33:28 – I will not be moving to Texas.
0:33:29 Let’s move on to our second story.
0:33:31 – Come on.
0:33:32 Why not?
0:33:33 You’re a closet, I thought you were a closet Republican.
0:33:35 I thought you were like Texas.
0:33:36 – No, you love saying that about me.
0:33:38 I don’t know, I love New York.
0:33:40 I’m having a great time here.
0:33:42 I just have the feeling that Texas is overrated
0:33:44 and people go because they don’t wanna pay taxes.
0:33:47 And that just doesn’t sound that appealing to me.
0:33:49 But I don’t know, I haven’t,
0:33:51 actually I went for South by Southwest,
0:33:52 but we were there for maybe 24 hours.
0:33:55 So I didn’t really get to experience it properly.
0:33:57 So I’m not really giving it a fair review.
0:34:00 – I can totally see you in Austin.
0:34:03 You can totally see at the proper hotel at the bar
0:34:05 getting like totally rejected by every recent UT crowd.
0:34:09 Why does that make me happy?
0:34:11 Why does that make me happy?
0:34:12 I’m a podcaster.
0:34:14 Hi, I’m a podcaster.
0:34:16 You may have heard of me.
0:34:17 – We’ll be right back after the break
0:34:21 with a look at the decline of short selling.
0:34:23 (upbeat music)
0:34:26 Support for this episode of Prop G comes from Indochino.
0:34:36 Summer is wedding season.
0:34:38 The Shemaltzi saved the day.
0:34:39 It’s the mason jar centerpieces
0:34:41 that tears warranted and unwarranted.
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0:34:45 to look their very best,
0:34:46 but it’s also a chance for you, the guest,
0:34:49 to look great as well.
0:34:50 And you might start with a custom suit from Indochino.
0:34:53 They send Ed, our own Ed, a pair of pants.
0:34:57 Just a pair of pants.
0:34:58 What did you think of your pants, Ed?
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0:35:30 Look your best this wedding season at the table
0:35:33 or on the dance floor.
0:35:34 When you wear Indochino, go to indochino.com
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0:35:41 That’s I-N-D-O-C-H-I-N-O dot com.
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0:35:47 (upbeat music)
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0:36:44 Atlassian.
0:36:48 (upbeat music)
0:36:51 – I’m Claire Parker.
0:36:55 – And I’m Ashley Hamilton.
0:36:56 – And this is Celebrity Memoir Book Club.
0:37:00 – A podcast that says what if your must read book list
0:37:04 and your absolutely must not read book list got married?
0:37:07 If you’ve ever seen a celebrity memoir and thought,
0:37:09 what could they possibly write about?
0:37:11 – The answer a lot of times is nothing,
0:37:12 so we have to make up the jokes to fill in the blanks.
0:37:15 – Yeah, so if you wanna know what’s in there,
0:37:17 but you don’t wanna waste your eyeballs’ strength,
0:37:20 we’re gonna tell you what’s in it.
0:37:21 So hop along for the ride.
0:37:23 – Who are we?
0:37:24 We are two best friends and two comedians
0:37:25 who had enough time to read a full book a week.
0:37:28 – We live in New York,
0:37:28 so we think we know everything about everything
0:37:30 and we’re gonna tell you what’s what.
0:37:33 – And if we’re wrong, that’s part of the fun.
0:37:35 – So if you are interested in celebrities,
0:37:38 in literature, in a good time with your pals,
0:37:42 tune into Celebrity Memoir Book Club.
0:37:44 – The podcast where we read the book
0:37:46 so that you don’t have to.
0:37:47 – You can listen to Celebrity Memoir Book Club
0:37:49 wherever you get your podcasts.
0:37:51 – I mean, can’t wait to hang.
0:37:53 – We’re back with Prodigy Markets.
0:38:00 It appears that short sellers may be a dying breed.
0:38:03 For the average S&P 500 company,
0:38:06 short interest in its stock is at its lowest level
0:38:08 in more than 20 years.
0:38:10 Activists were sluggish in 2022,
0:38:12 taking up short positions at the slowest pace in a decade
0:38:15 and 2023 was barely an improvement.
0:38:18 Even the most famous in the game have bowed out.
0:38:20 Jim Chanos, who’s known for calling BS on Enron,
0:38:23 gave up on shorting last year.
0:38:25 Assets in his short selling hedge fund
0:38:27 had created from more than $6 billion in 2008
0:38:30 to less than $200 million in 2023.
0:38:33 Now, as a reminder, short selling is a strategy
0:38:36 where you borrow a stock, sell it,
0:38:37 and then buy it back at a lower price.
0:38:39 You’re essentially betting on the stock going down.
0:38:42 But Scott, why do you think this strategy is dying off today?
0:38:46 – Well, I would argue this is cyclical, not structural,
0:38:49 because since 2009, the S&P’s increased 655%.
0:38:54 So, you know, if the market had lost 90% of its value,
0:39:01 it would have been awesome to be in the short business.
0:39:03 So, I mean, there’s just,
0:39:05 if you were short over any extended period of time
0:39:09 in the last, you know, in the last 15 years,
0:39:12 you’ve gotten your ass handed to you,
0:39:13 and it’s been hard to raise money,
0:39:14 and finally, you’ve probably thrown in the towel.
0:39:16 And typically, when people start throwing in the towel,
0:39:18 is usually the time, you know,
0:39:20 Julian Robertson, arguably one of the greatest investors
0:39:23 in history, Tiger, saw just these crazy stocks
0:39:26 going up and up in the internet,
0:39:28 and threw in the towel, I think, in ’99,
0:39:30 and then they crashed.
0:39:31 So, I think this is just purely cyclical.
0:39:36 Now, I would argue that short sellers play
0:39:39 in a really important part of the market.
0:39:42 They are very good at giving the other side
0:39:44 of the narrative.
0:39:45 When everyone barks up the same tree, you get stupid.
0:39:47 When you watch CNBC, you get stupid
0:39:49 because it’s, I think the vast majority of the people there
0:39:52 are basically just pumping, and, you know,
0:39:54 their advertisers are kind of long.
0:39:57 Their exchanges and trade like Chuck
0:39:59 has proprietary algorithm.
0:40:00 If you just ordered this investment strategy
0:40:03 on laser disk, which gives you a hint
0:40:05 of just how sophisticated he is,
0:40:07 or on Betamax or VHS,
0:40:08 you can spend more time with your family.
0:40:10 So, they’re gonna have a long bias.
0:40:12 Most of the people that are talking about pumping up stocks,
0:40:15 it’s really important to have people come on and say,
0:40:16 this is why this stock is overvalued.
0:40:19 Also, there’s a lot of whistleblowers in this,
0:40:22 which I think is probably helpful.
0:40:23 They call bullshit on companies.
0:40:25 And also, in cases where firms misrepresent
0:40:29 their financial statements, short selling is associated
0:40:31 with a faster discovery of the fraud.
0:40:33 And it also diminishes share price inflation
0:40:36 that occurs when firms misstate their earnings.
0:40:38 So, you know, this is important.
0:40:40 It’s also short selling is used by large institutions
0:40:43 as a means of hedging their long exposure.
0:40:45 Because, yeah, it’s sure you give up some on the upside,
0:40:49 but if things go to shit,
0:40:51 your widows and your orphans don’t,
0:40:54 you know, the reason I go short sometimes,
0:40:56 or at least the way I justify it,
0:40:57 in addition to the crack cocaine dope ahead I have
0:40:59 to gambling, is that I think while I’m so long,
0:41:03 especially heavy in tech, because that’s kind of what we do,
0:41:06 it’s not a bad idea every once in a while
0:41:08 to just have a bit of a short position.
0:41:11 And hedge funds are supposed to be 60, 40, 60% long
0:41:13 ’cause the natural trajectory of the markets is usually up,
0:41:16 but also to go short.
0:41:17 And what’s ended up happening over the last 15 years
0:41:21 is hedge funds really aren’t hedge funds.
0:41:22 What they are is levered long funds.
0:41:25 And so, I think it’s absolutely an important part
0:41:28 of the market, the people fomenting this bullshit
0:41:31 are CEOs and people who get angry at short sellers
0:41:34 who happen to show up on earnings calls and say,
0:41:37 okay, you’re an automobile company, not a software company
0:41:40 and you’re trading like an AI company.
0:41:42 And, you know, they don’t like those people.
0:41:43 They want all longs such that they can have a,
0:41:47 you know, basically a series of sick of fans
0:41:49 and stenographers asking them questions
0:41:51 and writing about them.
0:41:52 So I think it’s really important.
0:41:54 And the fact that short selling has gotten so out ofogue
0:41:56 and so many of these funds have been crushed,
0:41:58 I think that means one thing.
0:42:00 And I want to ask you, young padwan,
0:42:01 what does that likely mean, Ed?
0:42:06 – Sorry.
0:42:06 – Jesus Christ.
0:42:07 Go back to your slight saver training.
0:42:11 You’re clearly not ready for the beauty and–
0:42:14 – Repeat the question.
0:42:15 – Well, okay, let me put it this way.
0:42:17 Do you think short funds are going to beat
0:42:20 or miss or underperform the market over the next five years
0:42:24 based on what you have learned on this podcast?
0:42:27 – Well, I think we probably have a different view.
0:42:31 – That’s it.
0:42:32 You are banned to Tatooine.
0:42:33 You are seriously.
0:42:34 – Have you fucking learned nothing?
0:42:36 – I said, I think we’re gonna have a different view.
0:42:38 I think they probably underperform,
0:42:39 but I think you’re gonna say that it’s cyclical
0:42:41 and that they’re gonna overperform.
0:42:42 – Well, the fact that you have people
0:42:44 getting out of this business means that there’s less people
0:42:46 trying to borrow money, which means the interest costs
0:42:49 on borrowing stock will go down,
0:42:51 which means on a risk-adjusted basis,
0:42:54 there’s gonna be more upside to shorting stock.
0:42:56 So I would argue that this is exactly the time
0:42:59 to think about a hedge fund or a diversified index fund
0:43:02 that has, does occasionally short some companies.
0:43:05 And I would suspect that the few short funds
0:43:08 that survive this or go into this or run into the fire
0:43:11 are gonna overperform the market,
0:43:13 because as Jamie Dimon said,
0:43:14 a recession is something that happens every seven years.
0:43:17 It hasn’t happened in 15 years, and we are due.
0:43:20 – Haven’t we been due for the past?
0:43:23 I mean, as you just said,
0:43:24 we’ve been due for the past eight years.
0:43:26 – 100%.
0:43:27 And we keep using your credit card to juice the markets,
0:43:29 but at some point, what you just said is scary.
0:43:32 I remember in 1999, the Wall Street Journal
0:43:36 put out an article saying maybe we have moved
0:43:38 to a new economic model that because of technology
0:43:41 that is deflationary and productivity’s gotten so crazy
0:43:45 that there’s no reason that the markets aren’t in a new era
0:43:48 where they have sustained increases.
0:43:50 And then we saw what happened in 2000.
0:43:53 The only thing I am 100% certain of
0:43:57 is the market is absolutely going to throw up
0:44:00 and even crash.
0:44:02 I just don’t know when.
0:44:03 But that is part of the animal spirits
0:44:06 and the beauty of the market.
0:44:07 And that hasn’t happened in 15 years,
0:44:10 which leads me to believe when it happens,
0:44:13 it’s only gonna be more severe.
0:44:14 – Concerning.
0:44:15 I mean, the other side to this is that there’s just a lot less.
0:44:20 I’m getting away from the markets themselves,
0:44:23 just focusing on shorting.
0:44:25 There’s a lot less upside to going short,
0:44:28 even if you’re right.
0:44:29 I mean, that’s statistically true
0:44:32 because when you sell short, your maximum return is 100%
0:44:36 because the stock can only go to zero.
0:44:38 Meanwhile, your downside is unlimited
0:44:40 ’cause the stock can keep rising into perpetuity.
0:44:42 But here’s one start that I found very surprising,
0:44:46 which is that Hindenburg research,
0:44:48 which we’ve talked a lot about on this podcast,
0:44:50 kind of the gold standard of short selling firms today,
0:44:55 it actually doesn’t make that much money.
0:44:57 And you might remember this short seller report
0:45:00 that they released on Adani Group, which we covered,
0:45:03 and that was this industrials company in India
0:45:06 that’s owned and operated by this guy, Gautam Adani,
0:45:10 like the Indian billionaire, which is guy in India.
0:45:13 So when they released that short seller report,
0:45:15 it wiped out $70 billion in market value
0:45:19 just through their actions.
0:45:21 According to Bloomberg,
0:45:23 apparently they only made $50 million off of that trade,
0:45:26 which just feels like peanuts to me.
0:45:30 And the firm itself, I think only has like 12 to 20 employees,
0:45:36 some really small number.
0:45:37 And it just feels like there’s not actually that much money
0:45:41 in the short selling game, even if you’re right.
0:45:44 I mean, you’ve gone short in the past.
0:45:49 Have you ever made like a meaningful amount of money
0:45:52 on a short position?
0:45:53 Yeah, so I write covered calls.
0:45:56 When I have a stock that’s gone way up,
0:45:58 I’ll write covered calls way out of the money
0:46:00 as a means of taking some money off the table
0:46:02 and hedging a little bit.
0:46:04 So yeah, I’ve made meaningful money,
0:46:05 but I do it a little bit differently.
0:46:07 I don’t like to write naked calls
0:46:09 ’cause your loss is infinite.
0:46:11 It’s like collecting dimes in front of a bulldozer.
0:46:13 It’s a lot of fun until it’s not.
0:46:16 But writing covered calls where you write,
0:46:19 essentially you sell a call at a higher price
0:46:21 and kind of collect rent against your stock.
0:46:23 And if the stock skyrockets, it’s a net wash.
0:46:26 You give up some upside,
0:46:28 but technically it’s a wash because the stock goes up.
0:46:30 But yeah, I have made, I think I told you this in ’21,
0:46:33 I made a ton of money, ’22, I made decent money, ’23,
0:46:36 I lost a ton of money.
0:46:38 And so far this year, I just haven’t done as much of it
0:46:41 ’cause I’m trying to just sort of,
0:46:42 I don’t wanna be staring at my phone all fucking day.
0:46:45 But the way I see it is,
0:46:46 I don’t think of it as an investment strategy on its own.
0:46:51 I think of shorting as a great way to hedge.
0:46:54 I can sort of understand that market.
0:46:56 I do think the ultimate strategy for a young person
0:46:58 who has the benefit of time is just to go into a,
0:47:02 you know, SPY or to dollar cost into an index fund.
0:47:06 But shorting is a valuable part of the market.
0:47:08 And especially if you find your portfolio
0:47:10 for whatever reason is highly concentrated
0:47:12 in a specific sector and you don’t wanna sell
0:47:14 because you don’t wanna incur short-term capital gains.
0:47:17 I think that I like the idea.
0:47:19 It’s worth it to take a little bit off the table
0:47:21 in terms of upside to reduce some of the downside.
0:47:24 I think that’s a way to live a more kind of
0:47:26 emotionally balanced life, if you will.
0:47:29 – There have been a lot of arguments in the past and today
0:47:33 that it’s short-selling is harmful to companies.
0:47:36 It’s harmful to investors.
0:47:38 It’s sort of, it’s a predatory practice
0:47:42 where you’re profiting off of people’s losses.
0:47:44 And a lot of people have argued that it should be banned.
0:47:48 And in some cases, by the way, we have banned it.
0:47:50 For example, in 2008, during the financial crisis,
0:47:53 the SEC made it illegal to short financial stocks.
0:47:57 And that was all, you know, part of an effort
0:47:59 to sort of stem the decline and restore faith in the market.
0:48:03 My assumption is you just flat out disagree,
0:48:05 but where do you stand on short-selling regulation?
0:48:09 Do you think there’s any,
0:48:11 do you think those guys have a point?
0:48:12 – I would imagine that they saw kind of systemic risks
0:48:15 to the entire markets and the economy.
0:48:17 And so from the short term, they said,
0:48:18 “Look, we just can’t have short sellers.
0:48:20 We can’t have a run on the bank
0:48:22 that might cross the global economy.
0:48:23 Fine, I get it.”
0:48:25 In general, I don’t see why anyone would have
0:48:28 any less license to go short of stock versus go long it.
0:48:31 And it can reduce risk for people.
0:48:35 It creates a different level of scrutiny,
0:48:37 which is really good, creates more transparency.
0:48:40 And you have to have,
0:48:42 it’s really important to have a deliberative body
0:48:45 where we have Democrats and Republicans
0:48:46 giving each side of the issue such that we shape
0:48:49 through evidence and debate, better solutions.
0:48:52 What CEOs are saying,
0:48:53 whose economic wellbeing is tied to the company long,
0:48:57 are saying is we don’t want a debate.
0:48:59 We don’t want anyone looking over my shoulder.
0:49:01 We don’t want a counter narrative.
0:49:02 I want all of you to bark up the same fucking trees
0:49:04 so I can vest my options and have my Gulf Stream
0:49:07 before this pile of shit crashes.
0:49:10 You need these people.
0:49:12 You need these people out saying,
0:49:13 “This is why this company is overvalued.”
0:49:15 It’s, that’s an important,
0:49:17 the shit I get on,
0:49:18 hands down the most shit I’ve ever gotten on Twitter
0:49:21 is when I say a stock is overvalued
0:49:23 because the entire venture capital industrial complex
0:49:27 is like how dare you call my dog walking app
0:49:31 not worth $2 billion.
0:49:32 (laughs)
0:49:33 And it’s important that investors
0:49:38 have both sides of the story.
0:49:40 That plays an hugely important role.
0:49:44 All right, let’s take a look at the week ahead.
0:49:46 We’ll see earnings from Oracle and Adobe
0:49:48 and we’ll also see the consumer price
0:49:50 and producer price indices for May.
0:49:53 Do you have any predictions, Scott?
0:49:55 – Well, I can’t help it.
0:49:56 I’ve been watching the GameStop saga again
0:49:59 and it’s up, I don’t know if you saw this.
0:50:00 It’s up to 30% today.
0:50:02 It’s at 40 bucks as we record this.
0:50:05 My prediction is, I don’t know where it’s gonna be next week.
0:50:08 I don’t know where it’s gonna be the week after,
0:50:09 but my prediction is within 90 days, it’s below 20 bucks.
0:50:14 My thesis all along has been that
0:50:17 when Michael Jordan jumps into the air,
0:50:18 it looks as if he’s never gonna come down,
0:50:20 but gravity is underlying valuation, it’s fundamentals.
0:50:24 And this is a company that on any reasonable,
0:50:26 it’s trading at a P of 1,830 right now.
0:50:30 And at some point, the people in the stock are gonna go,
0:50:33 okay, this is fun, we’re gambling,
0:50:35 but at some point we need to cash in our chips.
0:50:37 And I think it’ll be as violent coming down.
0:50:39 And to say it’s an okay company is really generous
0:50:43 and this company will be below 20 bucks a share within.
0:50:47 This isn’t financial advice
0:50:48 ’cause this thing could be at 60 or more tomorrow,
0:50:52 but in 90 days, I think it’s below 20 bucks.
0:50:55 I think it’s cut in half, if not more.
0:50:57 Gravity, gravity, Ed.
0:50:59 – This episode was produced by Claire Miller
0:51:02 and engineered by Benjamin Spencer.
0:51:04 Our associate producer is Allison Weiss.
0:51:06 Our executive producers are Jason Stavis and Catherine Dillon.
0:51:09 Mia Silverio is our research lead
0:51:10 and Drew Burroughs is our technical director.
0:51:13 Thank you for listening to “ProfG Markets”
0:51:14 from the Vox Media Podcast Network.
0:51:16 Join us on Thursday for our conversation
0:51:18 with Morgan Housel, only on “ProfG Markets.”
0:51:21 (upbeat music)
0:51:23 ♪ Lights ♪
0:51:28 ♪ You help me ♪
0:51:34 ♪ In kind reunion ♪
0:51:39 ♪ As the world turns ♪
0:51:47 ♪ And the dark lights ♪
0:51:52 (upbeat music)
0:51:54 – Do we want to bang the new feed drum again?
0:52:06 – I don’t know, what does it look like?
0:52:07 (laughing)
0:52:08 Oh, I’m sorry.
0:52:09 That’s good.