00:00:00
He brought 17 CEOs with him and three diplomats. >> Flying billionaires on a plane to China
00:00:05
to get [ __ ] seems problematic. Hi everyone, this is Pivot from New York Magazine and the Vox Media Podcast
00:00:17
Network. I'm Cara Swisser >> and I'm Scott Galloway. President Trump
00:00:21
and uh Chinese President Xi uh have met for a little over two hours right now and attended a state banquet to start
00:00:29
off their two-day summit in China. In G's opening toast at the banquet, G said
00:00:33
achieving the great rejuvenation of the Chinese nation and making America great again can go hand in hand. He's
00:00:39
snickering at Trump behind his back though. The White House said both sides agreed that the straight of her moves
00:00:45
must remain open. Xi warned that Trump that mishandling Taiwan would cause clashes and put the entire relationship
00:00:51
in great jeopardy. Trump is joined in China by 17 American business leaders including Elon Musk, Tim Cook, and
00:00:57
Jensen Huang. Uh a surprising lack of women on this trip everywhere. Uh we and also China experts. We asked Alice Han,
00:01:05
director of Green Mantle and co-host of Prof's own China decode podcast uh for
00:01:10
her thoughts on the summit. Let's listen to what she has to say. So, US President
00:01:15
Donald Trump is heading to China. This is the first visit by sitting US president since 2017 when Trump was last
00:01:22
president. I'm carrying a threepoint scorecard going into the summit in terms
00:01:26
of rating it. Number one, will there be any indication as to tariffs and trade? Number two, will both sides agree to
00:01:34
freeze or maybe even loosen certain export restrictions on chips and rare earths? And number three is a thornier
00:01:41
geopolitical question. And I think both sides will have two very different readouts on Iran, but certainly both
00:01:47
leaders will be talking about it and I believe that Trump will apply some personal pressure on Xi Jinping to help
00:01:54
resolve it. Although I suspect the Chinese will be reluctant and push back on any kind of collaboration over Iran.
00:02:00
I think this will be largely summitry without substance and it does pave the way for more summits to come with
00:02:07
potential for two or three other meetings and a she visit to the US later this year. One concrete prediction I
00:02:15
have for this summit is that China will increase Boeing purchases of aviation equipment. I think the fact that the CEO
00:02:22
of Boeing is going there with Trump is an indication of that direction. Interesting. Um obviously so she does
00:02:29
summitry is a really good word. Um it's uh you know it's interesting because a
00:02:33
lot of the coverage out of it is that China thinks we're a declining empire and uh of course who he brought was
00:02:40
interesting. You typically bring business people on these things. It's absolutely true and he brought all
00:02:44
mostly tech people or tech adjacent people. Um, I think most people feel that as as she says nothing's going to
00:02:51
come out of this and it'll be interesting to see what signals uh she sends uh versus Trump. I think I think
00:02:58
he's the more important person to pay attention to. Your thoughts? >> It's not who he brought, it's the ratio.
00:03:04
He brought 17 CEOs with him and three diplomats. So, it feels as if America is just becoming an operating system for
00:03:11
the wealth of the top 1% and they >> billionaires on a plane like snakes on a
00:03:16
plane. >> Yeah. And what's the minimum amount of cheap calories and and entertainment,
00:03:21
you know, bread and circuses we can throw at the bottom 99 such that they don't, you know, revolt? And there's no
00:03:26
there's no policy. There's no prep. He sounds like an eighth grader with
00:03:30
terrible, you know, who's had to take he's failed English so many times he's
00:03:34
going to have to take it as English as a second language. It's like Jesus Christ,
00:03:38
can can someone buy the guy Elements of Style before he gives a talk? I mean, he
00:03:42
just >> I know the speech was in Chinese restaurants. I I didn't even understand
00:03:46
what he was talking about. They're laughing at us. You can feel it. >> And they I thought the most important
00:03:52
statement because you can be clear. Well, he's sort of he's sort of improvisation with a mic. You can bet
00:03:59
she calibrates every word. And the words that she said that I think should send a
00:04:04
chill down everyone's spine is he said that he hopes that America's current
00:04:09
approach, some of the effect of America's current approach towards Taiwan could result in a clash.
00:04:13
>> Clash. Yeah. And Trump hasn't really said a lot about Taiwan. He's not flying
00:04:17
to Taiwan with Speaker Pelosi and and and publicly cementing our relationship with the ally there.
00:04:25
>> It was a warning. >> Yeah. Or or not even a warning. It was more I saw it more as like a preview
00:04:29
that we are going to start we are seriously considering some sort of >> soft or not so soft repatriation,
00:04:37
acquisition, invasion, whatever, use whatever word you want of Taiwan. And I think had Trump had more elegant
00:04:46
diplomats with them, they would have immediately responded and put out a statement along the lines of, you know,
00:04:52
we are all both nations are committed to peace. And just as I'm sure we've
00:04:57
witnessed the incredible fighting force of Ukraine when armed with technology, they can repel a much larger aggressor,
00:05:03
which in my opinion would be an elegant way of saying stand the [ __ ] down when
00:05:06
it comes to Taiwan. >> Right. He doesn't sound like he was. and he would never he doesn't think he
00:05:11
doesn't he doesn't have the diplomats or the IQ to respond to what was really the
00:05:16
only substantive statement made at this summit and sending she or sending Huang over Jensen used to have 90% share of
00:05:24
trips over there it's gone to zero >> right >> because China's figured out that if I
00:05:28
provide my local entrepreneurs with the incentives to catch up they just might and uh our trade has gone from 23% of
00:05:36
their exports used to come with us now it's 17% % they have bigger trade with
00:05:41
the with ASAN the Asian the Association of Southeast Asian Nations and also they
00:05:47
do more trade now with Europe. >> Yes, they do. >> So we showed up you know it it looked
00:05:53
less like diplomacy than sort of two casino owners trying to refinance each other's debt. The but she but she is the
00:06:00
house right now. Trump came in as a guy asking for an extension on his mark or his credit.
00:06:07
We are mutually each of us has a foot should we decide on the other's corateed artery. They own
00:06:16
70% of rare earth minerals and 90% of the processing. We own or control with Taiwan 80 to 90% of sophisticated chips
00:06:24
which is why Jensen was there to be able to sell. This is something Trump barred
00:06:28
by the way and then now he wants to sell the chips into China. Can I make a comment about all the business people as
00:06:34
you said? I mean it really was there's so many important issues like there should have been a discussion about
00:06:40
global AI standards in warnings just the way with this group cooperating on scary
00:06:46
[ __ ] and this group is all in on whatever it's there's nobody who is a
00:06:52
everything they do nobody is a critic of it this is like you know flying billionaires on a plane to China to get
00:06:58
[ __ ] seems problematic from a visual point of view >> you're exactly right this should have
00:07:03
been an opportunity to develop the modern day equivalent of Interpol. We have cooperation even amongst Russia and
00:07:10
China around nuclear weapons. We cooperate and we go kill people if we think they're trying to mix up a
00:07:15
biological, you know, a b, you know, a boweapon. We cooperate and we go find those people and we arrest them or kill
00:07:22
them. We should be doing the same thing of cooperating around AI >> publicly. Publicly. I I suspect there's
00:07:27
behind the-scenes stuff happening, but of course there is. But at the same time with this gang, just like with the
00:07:33
advisory council on AI, it has nothing to do with safe safety and AI or anything else. It has to do with let's
00:07:40
do some business here and as long as it's good for us and my rich friends, I'll do it. But it was so it was he
00:07:46
looked tired, he looked old, he looked adultled, he's all those >> and then he was tweeting his were truth
00:07:54
in his little heart out like with his apparently the piece in the Wall Street Journal. I don't know if you saw that
00:07:58
piece of him >> was a truth 200 truths in a 4-hour period >> whatever it's this lady who helps him
00:08:04
this young lady who has a startling uh resemblance to Ivanka uh who stays up with him late at night and does this and
00:08:12
even the White House people don't know what to make of the situation and the
00:08:15
journal was implying some stuff like they were trying not to but she facilitates him posting this crazy
00:08:22
stream of lunacy >> when I'm old I just hope I have someone facilitating
00:08:27
Anyway, um you know, his name is Manny. >> Okay. I know. I know. Manny is the soft
00:08:34
hands. Manny with the soft hands. I'm going to I'm looking for me. Anyone
00:08:37
named Manny with soft hands, call me and I'm going to get you ready for Scott,
00:08:40
which should be in about 10 years. Okay. Well, you should know that. >> 10 years. Don't you think?
00:08:44
>> I'm I'm I'm difficult, but I'm very generous in terms of
00:08:47
>> competition. I know you. When do you think you'll be going down? Like going
00:08:50
down to >> I think I think the correct term is went >> went. No, no, but really going down like
00:08:55
hard. Going down. >> When you say going down, you mean needing help? >> I mean like in the need for a manny. In
00:09:00
the need for a manny. I'd say 82 for you. >> Jesus. That early? I >> think so.
00:09:05
>> My dad My I'm assuming I'll follow the pattern of my dad at about 93. My dad
00:09:10
needed help. >> 93. Okay. Yeah. All right. Okay. Manny, get ready. So Manny might not be born.
00:09:15
>> Yeah. >> Yeah. >> But just back to for a moment back to the summit.
00:09:19
>> Okay. where >> Trump doesn't recognize the evolution of China since the last time he was there.
00:09:24
China's no longer trying to copy Silicon Valley. They're trying to replace it.
00:09:28
>> That's correct. >> Alibaba alone is going to spend $53 billion on AI. We're so focused on the
00:09:34
hyperscaling and the capex here. You know, US hyperscalers are spending 650 billion, but 53 billion from one
00:09:41
company, China usually typically has the ability to make their dollars go much further. And what they offer is
00:09:49
the fastest zero to a billion dollar companies in history have one general business strategy and we like to think
00:09:57
it's the innovator. No, it's not. The second mouse gets the cheese or specifically the shareholder value. And
00:10:03
the most dramatic or the most accreative business strategy in history is to provide the following. 80% of the leader
00:10:13
for 50% of the price. My first strategy engagement of profit was the basically this idea and that was a lot of people
00:10:20
couldn't afford the gap in the 90s. A lot of people think of it as being a kind of a middle-ass retailer. The gap
00:10:25
is expensive for a lot of people. Most people can't afford >> $22 pocket tees. And the idea was let's
00:10:32
tap into this huge population of single mothers who are very conscious about their children's confidence at school
00:10:37
and offer 50% or I'm sorry 80% of the gap for 50% of the price. Old Navy, fastest billion dollar retailer in
00:10:44
history. Southwest is essentially when it started 80% of the majors for 50% of the price. China's entire strategy is
00:10:53
we'll give you 80% of a seaman cell tower for 40% of the price. >> Yep. Yep. They're very innovative, too.
00:11:00
Let's let's say, you know, this idea of what they're they are a very dynamic
00:11:05
autocracy. Let's just they are a very like dynamic and nimble autocracy. >> Just incredible.
00:11:10
>> Yeah. They have tons of problems. There was just an interesting I mean similar
00:11:13
stories. Decline in marriages, decline in kids. Um they certainly plan that for part demograph I mean they have their
00:11:18
own issues. Youth unemployment demographics real estate over real estate morale stuff like that. Yeah.
00:11:25
Which is problem more problematic in an autocracy but it's problematic here too.
00:11:28
Um all right Scott we'll see what happens. Nothing. It's a nothing burger.
00:11:32
We'll see if they have do more but the I agree with you. Taiwan is where we need
00:11:35
to f focus. Um, that will be a disaster of that will be our greatest crisis of this era, I think. Um, okay, Scott,
00:11:44
let's go on a quick break. When we come back, Sam Alman takes the stand. Support
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quint.com/pivot. Scott, we're back. It was Sam Alman's turn in the hot seat this week. At the
00:13:11
Elon Musk OpenAI trial, Sam denied Elon's claim that he tried to steal a charity and said Elon supported Open AI
00:13:17
becoming a for-profit company as long as Elon had total control. That sounds pretty accurate as far as in my
00:13:24
experience. Let's go through some of the other highlights from Sam's testimony.
00:13:27
Sam described quote a hairraising moment when Elon suggested control of OpenA should pass to his children after his
00:13:33
death. That is hairraising. Sam said Elon's departure from OpenA in 2018 was
00:13:37
a morale boost for employees who did not like his hardcore management style. I was there during that time. That's
00:13:43
exactly what they described. I have to say I heard from a lot of people he was like a big giant [ __ ] baby. And he
00:13:49
does that with all his comes. He comes and yells, kicks a can, and then leaves. And they can't wait till he leaves. When
00:13:54
pressed on his open AI equity stake, Sam acknowledged he holds a passive stake through a company of in the company
00:14:00
through Y Combinator. I also want to mention that Cara Swisser came up in the trial this week. I was surprised not
00:14:05
more. While Microsoft CEO >> was surprised not more >> no because I was texting a lot with the
00:14:09
most Cara Swisser thing Cara Swisser surprised I wasn't mentioned more. >> I texted with them all during this time.
00:14:17
The Microsoft Satcha Nadella was testifying. Elon's lawyers were questioning Nadella about the nature of
00:14:23
Microsoft's relationship with open and pointed to comments he made during an
00:14:26
interview with me after Sam's uh firing. He was he he was all in for Sam during
00:14:31
that period. Uh closing arguments are getting underway right now. So again, your LA any I don't think there's any
00:14:37
more last minute surprises. Elon was not supposed to leave the country by the way
00:14:40
according to the judge but he did anyway. Um he was supposed to be you know on call essentially but he doesn't
00:14:46
care. Um any last minute surprises? anything. It seems like it's going the way we talked about. Thoughts with this
00:14:54
jury? >> I don't have any additional color here. Again, I think this is grievance
00:14:58
cosplaying a legal argument. So, this is a traditional jury trial and the jury decides this.
00:15:02
>> It's a jury decision and then the judge will decide remedies. So, it you know he
00:15:07
she if he lose if if Musk wins, they might say, "Well, we're leaving it as it
00:15:11
is and going with the California thing and they can pay him money or whatever. We're not going to get rid of the CEO."
00:15:16
That's one of the things he's asked for. Brockman and Alman to be I I think he
00:15:20
can't poss I think this jury can't possibly side with him. I mean ultimately I don't think they proved
00:15:25
anything and it's a sort of he said he said kind of thing and Elon's the most
00:15:30
loathome of the pair right by far by the country mile. So I think Elon's made a
00:15:35
spectacle of himself. If he wins it would be something else like I'll tell you that. Um but I can't imagine the
00:15:40
jury thinks this guy got the got a short end of the stick or that he's stupid and
00:15:44
didn't know what was happening to him. I think that's really he's sort of played
00:15:47
this I'm a genius. Well, if you're a genius, how did this happen kind of
00:15:51
thing? You're not a dupe. And so, um, so I think they probably think he's lying.
00:15:56
And there's enough there's enough evidence that he is. Um, or or just as
00:16:00
you said, grievance theater, but we'll see. We'll see. Um, I think it might be
00:16:04
it'll be very fast if that's the case. Um, but I think and and also the California has signed off on this and
00:16:10
everyone else agrees. It's just Elon who's butt hurt. In any case, I have a
00:16:13
feeling it's going to be quick, but we'll see. It would be a real shocker if
00:16:16
you won. Um, the latest inflation numbers are out and the news is not good. Consumer prices rose 3.8% last
00:16:23
month, the biggest increase in three years. Energy costs obviously accounted for more than 40% of the monthly
00:16:28
increase with gas prices up 28%. Grocery prices, rent, and airfares also climbed
00:16:33
sharply. President Trump, however, does not appear to be overly concerned. Let's
00:16:37
listen to how he answered a reporter's question as he left the White House for
00:16:40
his China trip. When you're negotiating with Iran, Mr. President, to what extent
00:16:45
are Americans financial situations motivating you to make a deal? >> Not even a little bit. The only thing
00:16:52
that matters when I'm talking about Iran, they can't have a nuclear weapon.
00:16:56
I don't think about Americans financial situation, I don't think about anybody.
00:17:01
I think about one thing. We cannot let Iran have a nuclear weapon. That's all.
00:17:06
That's the only thing that >> Oh, wow. That was that was some quote. That was like an ad. Like they just he
00:17:12
cut an ad for them. It was that was astonishing, I have to say. I mean, it's
00:17:16
what I it's what I think he thinks. And this nuclear weapon thing, we're less
00:17:19
safe now than we were during the Obama days when we had most of the enriched uranium and a deal and the state of
00:17:25
Hermuz was open. So, any thoughts about what he's doing here? Why? Or he's just
00:17:30
just an old adult man who just says whatever's on his mind. I don't know.
00:17:34
>> Yeah. So, look with this administration. So the the quote unquote objectives of regime
00:17:42
change. Oh wait, no nuclear weapons. Oh wait, unconditional surrender. I mean there there really isn't it's so back
00:17:50
and forth and you know erratic that it's difficult for him to outline or be taken
00:17:57
seriously. Having said that, I do believe that loosely speaking, the way what he said
00:18:04
there is how presidents should approach wars. Wars are more than gas prices. Wars involve killing people and putting
00:18:12
our own men and women at risk. >> Sure. And I think and he's not the guy
00:18:17
to do this, but I do think the president should be willing to have an adult conversation with the American people
00:18:22
and to say that the reason we have decided to put our own men and women in harm's way and commit this type of
00:18:29
treasure and talent and potentially kill many of their citizens is because we think it's worth it. And this is why we
00:18:37
think it's worth it. And quite frankly, we don't go to war unless we as your
00:18:44
leaders have decided that the American public are going to have to sacrifice. George Bush told us we could go to war
00:18:50
and cut taxes and Americans believed him. >> So I think an adult conversation with
00:18:56
the American public around we have consulted with Congress, we've consulted with our allies and we believe whatever
00:19:02
the objectives are are worth some sacrifice. I think that is the right thing for a president to say,
00:19:08
>> right? >> But this requires an adult conversation, more leadership, more gravitas, and
00:19:14
clear objectives. And none of those things are, you know, evident with this president. But again, I think the
00:19:23
president should be the person to say to the American public, I'm not going to
00:19:26
take you to war unless I think it's worth it and also unless I am willing to
00:19:30
ask you to sacrifice. >> That's not how he asked it. He's like, I don't give a [ __ ] He doesn't have any
00:19:35
objectives. It's worse than before. He's made it worse. And it's not a war. Like
00:19:40
it's not it's He's kind of right. It's not It's something else where it's just
00:19:44
a disa. It's just a big [ __ ] mess. The same his casinos and you know, everything he touches turns to this in
00:19:50
some way. Just even the even the New York Times story about the reflecting pool. What a mess. He gave it to some
00:19:56
group of people who can't fix it. There's already leaks already. It's
00:19:59
being painted a color that's not going to let it reflect. It's going to the
00:20:02
non-reflecting pool. Everything he does is shoddy and haphazard and unplanned and with a huge whiff stink of
00:20:12
corruption attached to it and you know and then telling them I don't really care about you is really I think
00:20:18
disastrous. It's why his numbers are going down is nobody believes him about
00:20:21
anything that he says except that he doesn't care about you. And I think that's a I I agree that president should
00:20:28
say things honestly but I don't think this is honest. I think this is just he
00:20:32
could give a [ __ ] is what he's saying to you and doesn't have any plan except for
00:20:37
disaster. >> Well, there's the perception and there's the reality and I think that I think the
00:20:41
perception after kind of eight or 10 very bad weeks for the president, I think he's actually had a good couple
00:20:46
weeks. I do think he looks presidential with Shei, although nothing got accomplished other
00:20:51
than some saber rattling from Shei. Um the Virginia I think Virginia is a big deal. the
00:20:59
Supreme Court rejecting the attempt to redistrict. I think he's had actually a
00:21:02
a decent couple. >> I actually don't. I think the Supreme Court is going to give it to Virginia
00:21:06
because he gave it to everybody else and I think it's gonna I'm sorry. Can they
00:21:09
give it to >> It's going to the Supreme Court. That decision is going the Supreme Court has
00:21:13
to >> Oh, you think you think the redistricting will be allowed? >> Yes, I think it'll be allowed and
00:21:18
because he's they've allowed it everywhere else. It's very hard not to
00:21:20
allow it if they've allowed it everywhere else and they Texas. As we said last week,
00:21:26
>> he can do whatever he wants cheating, but polling doesn't lie. And polling is
00:21:30
showing that you he can't outrun the polling no matter how many times he cheats. I think he has had a bad couple
00:21:36
of weeks actually and he looks older and more adult than ever. I just I think that this was a typical He's just saying
00:21:43
whatever is on his brain. He wasn't doing it to be, you know, tough with the
00:21:47
American. He didn't do it with care. I don't care what anybody's like. I don't
00:21:50
think about anyone's financial Americans financial situation. I don't think about
00:21:54
anybody. That's ridiculous. And he, you know, we were safer before and we're
00:22:00
less safe now. Anyway, um it was interesting. >> When's the last time you think he had a
00:22:04
good two weeks here? >> Uh when he won. >> Okay. >> When he won. I don't think it's this is
00:22:10
I think this has been I that part of his first term some of the stuff was okay. Um
00:22:14
>> so it's been 78 weeks of constant. No, I do think No, I think when he won I think
00:22:19
when he won and he had a real opportunity >> was a year and a half ago. >> Yeah. I think it's been like a series of
00:22:25
like the one forgets the immigration disasters, the shooting of US citizens, the um all the stupid people he's hired,
00:22:32
the drunken Cash Patel, the lunacy of RFK. I don't think there's any >> Well, we shouldn't have dyes in our
00:22:40
food. Yes, sounds good. Like, I don't know what to say. I think it's very
00:22:43
small little wins. Um, and I think the stock market's done well, but I don't think it's I think
00:22:48
it's detached from everyone else's uh experience. Um, and you know, billionaires have had a good time.
00:22:54
That's for sure. Tech billionaires. Um, but this rise in inflation to me is the
00:22:59
only thing that matters at this moment for most people. >> What people miss, we're very focused on
00:23:04
unemployment. We think that unemployment causes unrest. It's actually not unemployment that causes the greatest
00:23:11
levels of unrest. It's um what really upsets people and moves them to political action and sometimes even some
00:23:18
form of revolution which I think we're already in is not people who aren't
00:23:22
working. It's people who are working and yet still hungry. And that's what's
00:23:26
going on here. The unemployment rate is 4 and a.5%. That's not what ails America. What ails
00:23:31
America is that people have two jobs and can't afford healthare. So when and when now we have inflation
00:23:40
or prices outpacing wages that just translates to the following the quality of your life goes down.
00:23:46
>> Yeah. >> And the problem is America and I lay a lot of this Trump doesn't have the IQ or
00:23:51
the integrity or the honesty to do this or the the confidence around him. But I would also argue that America isn't
00:23:59
ready for an adult conversation because if you're going to be serious about inflation, it's very long-term difficult
00:24:04
things. It's there's a relationship between essentially the economy breaks
00:24:09
into three buckets. There's labor that is the earners, there's shareholders,
00:24:14
the owners, and then there's consumers. And because of a lack of antitrust, because of tax policy, we have decided
00:24:20
to massively transfer power and economic well-being from consumers and earners or
00:24:26
laborers to shareholders. And everything we do, every tax policy, keeping minimum wage low, uh riding off
00:24:34
all capex, subsidizing certain uh certain industries, everything is about how do we consistently take money from
00:24:42
earners who minimum wage was 725 years ago. it's still 725 the NA despite the
00:24:47
fact that the NASDAQ has quadrupled and push more and more money into shareholders and also the most boring
00:24:54
thing that no one wants to talk about is that when you go from 12 chicken companies to three when you go when you
00:25:01
let pharmaceuticals consolidate when you let health systems consolidate when you
00:25:05
let healthcare verticalize when you let one company control 90% of search 50% of
00:25:11
e-commerce 78% of social media they will extract greater and greater rents from consumers and earners and transfer it to
00:25:20
owners. It requires antitrust. It requires uh really interesting uh or more severe quite frankly entitlement
00:25:28
policy where we reduce our entitlements. You're going to have to reduce the military budget. You're going to have to
00:25:34
increase taxes, 40% AMT across corporations and millionaires, and then slowly but surely create more
00:25:41
competition, lower rents on consumers, and a transfer of capital back from the owners to the earners. But the American
00:25:48
public doesn't have a political election cycle that that creates a serious conversation around these things.
00:25:53
>> No, I get that. I get that. I'm talking about people feeling it like at all
00:25:56
levels. And you do you do when you when you go out. I mean, I I was I know it sounds dumb, but I do I do do Amanda and
00:26:03
I split the grocery shopping, but I went to get a quart of milk and I was like, "What?" It was like $6 or $7 and I was
00:26:10
like, "Are you [ __ ] kidding me?" And it's not just looking at the gas pumps
00:26:14
or there was something I was in a airport and there was a sandwich and they were like,
00:26:19
>> " $14." I'm like, "What?" Like, it was it was, you know, I I I didn't get it. I
00:26:26
was like, "Well, that's a lot of money for a sandwich." like kind of thing. And
00:26:29
so I don't begrudge them having to raise prices. It's that it was it's just I
00:26:33
think people who are price resist like price insensitive are noticing it. Like that kind of thing.
00:26:40
>> You can't help if unless you're just holed up in your house, you can't help
00:26:43
but notice things have gotten a lot more expensive. >> Yeah. >> But there's there's shock and there's a
00:26:48
reduction in the quality of life and then there are threats to your own personal safety. Correct. And those
00:26:53
>> when you see um affordable care act subsidies go away, you have someone
00:26:58
who's literally dependent upon diabetes medication for their life see their insurance bill go from $178 a month to
00:27:06
1700. >> Yeah. >> And it's as if the government has said to them, "We don't care that you're
00:27:10
working hard. We've decided that you're going to die." >> Yeah.
00:27:13
>> And those are the I think those are the kind of what I would call You're going
00:27:19
to have I I think we have bad economic policy. that results in inflation and a decline in prosperity. What is
00:27:25
unacceptable is that someone is worried when someone starts rationing their prescription medication. That just that
00:27:33
just that should not happen in >> or cuts off. You know, there was a really upsetting story in the New York
00:27:38
Times, a woman writing about her kid who died of cancer, but like they've cut
00:27:42
cancer, pediatric cancer things, and so these you can't get in these studies
00:27:47
because they don't ex they suddenly disappear these advanced studies and everything cuz you know he doesn't say
00:27:52
we're not going to help pediatric cancer anymore. What he says is we're cutting
00:27:56
all over the place. So in essence, that's what we're doing. Anyway, the rise of inflation comes as Kevin Walsh
00:28:01
takes the reigns as Fed chair. Worsh was narrowly confirmed by the Senate this week in a 54 to 45 vote. It's usually
00:28:09
unanimous, which is where we are. Um he's certainly qualified. The question is most people don't think the rates are
00:28:15
going to be cut. And so juggling this inflation with Trump's demands to lower
00:28:19
interest rates. Most people think he will not be lowering interest rates um at this moment given the inflation
00:28:25
numbers are so high and there's no signs that they're going down. Just thought
00:28:29
very quick thoughts on that. We like to simplify things in the media that this guy's going to come in and cover rates,
00:28:33
but people don't want to actually pay attention to the mechanics of the Federal Reserve and that is the Federal
00:28:41
Open Market Committee is the one that decides whether to cut rates or not. So while the Fed chairman has the bully
00:28:47
pulpit and sets the agenda, he's one of 12. He's one of 11 or 12 votes >> and Powell is still there as you say.
00:28:53
>> Yeah. So, no interest rates. Kevin Walsh, while you know, a really disappointing testimony at a Senate
00:29:01
confirmation hearing, he's not stupid and he doesn't want to go down in history, is the guy that ignited an
00:29:07
upward spiral of inflation. So, there's there's not going to be a rate cut. And
00:29:12
and as a matter of fact, Khi says there's a 72% likelihood there's no rate
00:29:16
cuts for the rest of the year because you still there these Fed governors don't want to be known as the people
00:29:21
that that created bread lines. >> Yep. Depression. >> And when you have when you come off a
00:29:25
print of 3.8%. There's no [ __ ] way. If War started making noises that we should cut rates,
00:29:32
those guys would go on background to journalists saying this guy's [ __ ] insane in threatening a Weimar Republic
00:29:38
like inflationary economy here. >> Yeah. I mean, I think it's it's the
00:29:42
deficit and everything else. Maybe they should consult Zoran Mandami, who balanced the New York budget.
00:29:46
Interesting. >> What did he cut? I'm curious. I haven't been following it.
00:29:50
>> Uh, some consultant stuff, a bunch of things. He's doing a rather good job
00:29:54
with services. He opened the streets for um the soccer the FIFA matches. He in front of schools, he closed off streets
00:30:00
so kids could play soccer, like learn to play soccer, and brought in all these soccer players and stuff. He's very good
00:30:06
at services, this guy. I'm just saying. I think Trump's got to focus in on
00:30:10
providing services to citizens. That's what you're talking about. The idea of
00:30:13
that people get something out of government and it's not to be kicked in the [ __ ] teeth. And I think that's
00:30:18
really the the difference between lots of cities and a lot of both Republican and um Democratic Sen governors and
00:30:27
mayors who are providing people better services uh in a smarter way. Anyway, that to me is the goal for everybody.
00:30:34
Anyway, we're going to go on a quick break. When we come back, we'll talk
00:30:37
about the biggest donors uh for the midterms. >> Support for the show comes from Clavio.
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today at cloud.ai/pivot. That's cloud.ai/pivot. And check out Cloud Pro, which includes
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access to all of the features mentioned in today's episode. cloud.ai/pivot. Scott, we're back. The biggest donor for
00:32:51
the 2026 midterms may or may not surprise you. It's Andre Horowitz. The VC firm and its co-founders Mark Andre
00:32:58
and Ben Horwitz have already spent more than $115 million this election cycle outspending both George Soros and Elon
00:33:05
Musk. Uh much most of the money is spent on the right. It's Musk, Jeff Yas, and
00:33:09
uh these two. Um Soros is is the is the opposite but much smaller in comparison.
00:33:15
A major chunk of that money is going towards pro crypto and pro-AI super PACs. What a surprise. It's where their
00:33:20
investments are. Trump and the GOP are also benefiting. Uh Andre Horowitz and his founders have together donated
00:33:26
roughly $12 million to Trump's super PAC, MAGA, Inc. and a trust linked to Mark Andre gave nearly $900,000 to the
00:33:33
Republican National Committee and Mark um you know, not a surprise. I mean, not that this guy has moved, you know,
00:33:39
firmly. It's mostly Mark, but Ben is right along with him as always because he's this little follow little little
00:33:45
follow puppy. Um just typical. Just typical. I mean, this is not a surprise. And then he tells nonsensical stories
00:33:52
about how he went right, none of which are true. >> Um, uh, your thoughts.
00:33:58
>> It's smart. >> Yeah. >> Uh, it's wrong, but it's smart. It's the
00:34:03
greatest ROI any firm can get right now. >> I think he's figured it out. Yeah.
00:34:06
>> This is pay for play. And by the way, Horowitz used to give a lot of money to
00:34:09
when he thought Kamla was going to give money to >> Kla. He did. Mark used to be a big Gore
00:34:15
person as I recall a long time ago. He wasn't ever. People are like, "Oh, you
00:34:19
used to be Democratic." I was like m not if you were if you spent any time with
00:34:22
him he was certainly wasn't he certainly was he was Mark is one thing which is
00:34:27
self-interested in the most extreme way you're ever going to meet someone he's
00:34:30
very >> called the corporation >> I agree but I'm saying it's really quite
00:34:34
it's really quite he doesn't even pretend he's really the most selfish
00:34:38
person ever Scott I get it but I mean it's about incentives it's just >> if the greatest ROI if you're the CEO of
00:34:46
a company or the head of a venture capital firm and the greatest ROI on any spending. It's not hiring more people.
00:34:51
It's not investing in planned property and equipment. It's to give money to a
00:34:56
president who will who will pass legislation or block legislation that takes the value of your portfolio
00:35:02
companies up 10, 20, $30 billion. That $115 million investment is the best money you can invest.
00:35:09
>> Absolutely. So, I agree. >> Again, it's the boring [ __ ] Term limits on the Supreme Court. No
00:35:17
gerrymandering. get rid of Citizens United. Until we do those things, you're gonna have strong
00:35:24
men or women or or fascism from the far left or the far right. It's you're
00:35:28
right. You're always going to have it. And we're outraged at Andre Horowitz.
00:35:33
Soros. Okay. There'll be Democrats that'll do it. I bet Jensen Hang is about to write a $300 million check to
00:35:39
somebody. >> Who knows? Who know? I You know, it's interesting because look, they they have
00:35:44
shifted, right? But I I my point is Mark was never never liked anybody. Like that's all I'm saying now. He likes
00:35:51
himself and his things and that's it. I It's very I agree with you. It's the
00:35:55
right corporate thing to do. I've never met someone who is so anti- people in my life. Like just has such
00:36:03
disdain for humanity in a way that's really remarkable actually. Just doesn't
00:36:07
like anybody like essentially. And he would do it to the left or right depending on what suited him. What what
00:36:12
someone was asking me, well, there are left-wing people are going to give money. I'm like, I don't want who knows
00:36:18
what they're going to be next week, and I don't want any like individual rich
00:36:22
person, left or right, to be able to take advantage of this way. It seems unfair. Other people don't get an
00:36:28
audience with the president. And they have an un unnecessary advantage based on money. And that's kind of gross in
00:36:34
some ways. >> Gross. Elon Musk after the SpaceX IPO might be worth between 700 billion and a
00:36:42
trillion dollar. >> Trillion dollar. Yeah. >> If he takes 1% of his wealth or 10
00:36:46
billion >> with his command of technology, >> he can decide who the next president is.
00:36:51
>> He can. That's what I mean. >> Is that what you want? Taxes are our
00:36:56
Kevlar and our vaccine from power. We need to stop thinking about taxes as something that is inherently evil and
00:37:05
slows down the economy. That's bad taxation. Taxation protects us from I don't want to call them billionaires
00:37:13
because I don't want to demonize them. Taxes protect us from an unhealthy aggregation of power.
00:37:19
>> Mhm. >> Due to money >> 100%. >> We shouldn't have any individual I don't
00:37:24
care if it's Soros. I don't care if it's unions. I don't care if it's Lauren Pal
00:37:30
Jobs, although I think she's a wonderful woman and I'm not, this isn't a
00:37:34
character assessment, >> right? >> You can't have an individual with this
00:37:39
much power and taxes are the only way, our only protection, our Kevlar against the aggregation of this type of power
00:37:47
and Citizens United. >> Yeah, I got to get rid of it. >> Speaking of which, all my friends have
00:37:52
decided you've become a lesbian because of Per. >> Really? >> They were like, what? Like they were
00:37:58
like, "Huh?" >> They weren't expecting that. >> No, I was not.
00:38:01
>> Oh, by the way, a lot of my friends are like getting sending me messages like,
00:38:04
"What the [ __ ] Shut up, buddy." >> Pit Scott is a lesbian from San
00:38:10
Francisco. Now, speaking of virtue sign, >> I go issue by issue. >> I get it. I get it. Speaking of, I get
00:38:15
them getting more money. Besides Elon becoming a trillionaire, Anthropic is in talks to raise new funding that would
00:38:20
value it at up to $950 billion. uh if completed, the company's valuation be 2.5 times what it was just 3 months ago
00:38:27
and higher than OpenAI's valuation of 852 billion. Of course, there's the
00:38:31
overhang of that trial with Open AI right now. Um it's a huge thing, overinflated. Uh I don't know. I don't
00:38:39
know. >> Uh look, we've never seen a company scale like that. Um so, and we've also
00:38:46
never seen Pepsi overtake Coke or or Avis overtake Herz as quickly. We've never seen this type of of transition or
00:38:54
pivot or reversal in fortunes. And and also I still think OpenAI's valuation uh
00:39:01
IPO is probably going to be a hit. So get this. In March of 2025, Anthropic's
00:39:06
valuation was 61 billion. So it's up 15fold. It's up 15fold in the last year.
00:39:12
>> A lot of parties in Silicon Valley. >> Well, okay. It was 9 billion in annual
00:39:18
recurring revenue in December. Last month it was 30 billion. and they think this month it's on track to reach 50
00:39:23
billion. Um, for the first time more businesses are using Anthropic than Open AI, 35% versus 32. Anthropic's business
00:39:33
adoption quadrupled over the past year while Open AAI has grew is basically flat. And so a board decision on this
00:39:41
financing is expected later this month with the and they think the IPO might happen as early as October.
00:39:47
And Cali is saying it's a 70% chance it goes public this year. Um and then there's also
00:39:54
um a 60% chance that they have the best AI model at the end of the year. I don't
00:39:57
know what that means. Look, I don't this company is >> it's just absolutely firing on all
00:40:03
cylinders. Having said that, >> yes, >> my thesis is that go long GLP1 and short
00:40:10
AI because I don't think I think it's impossible to maintain a lead in AI with
00:40:16
AI and that is if you look at the technical specifications it's moving more towards par than
00:40:22
differentiation and I think it's going to be difficult for any one company to
00:40:26
maintain a technical lead here and that that will drive down margins and then when these openweight AIs when she
00:40:32
starts engaging and AI dumping, which is what I would do if I were him. I think it's going to drive down their margins.
00:40:38
And the good news is, I think, similar to vaccines or PCs or jet transportation, the winners will be us,
00:40:45
uh, not these companies. But I'm >> Yeah, there'll be one or two companies
00:40:49
that will dominate. Probably Anthropic is one of them at this point. Interestingly, probably Google is the
00:40:54
other. >> We have become used to any innovation resulting in a small number of companies
00:40:58
capturing trillions of dollars in shareholder value. Again, my thesis is that AI might be more like jet
00:41:06
transportation, vaccines, and PCs, and that no one companies share. >> So, it would be funny if Apple spent
00:41:11
nothing and ends up benefiting the most, which is >> Yeah, it'll be it'll be
00:41:16
>> 100%. >> That's sweet. Uh, just last thing, Google, speaking of Google, is in talks
00:41:20
with SpaceX for a rocket launch deal to put orbital data centers in space. The deal is based on currently unproven
00:41:25
technology that Elon said is the next frontier for his rocket company. I I kind of like this idea. It's totally
00:41:30
unproven. And Google has a history of investing in wacky schemes. At one point, they had um they were investing,
00:41:37
this sounds like a Sergey Bin thing happening here. They used to beef over some girl, but now they're getting
00:41:43
along, I suppose. Um uh there's uh anyway, this is something Google has done this. They had wind they had wind
00:41:52
up in wind kites at one point. They were going to do a chairlift in San Francisco. They had a a a ship, an
00:41:58
energy ship parked off the uh the city in San Francisco. This is nothing. This is feels smells like Sergey Brin to me.
00:42:07
And so he would try anything and this would seem cool to him. So sure, why not? Why not invest in it? What's the
00:42:12
difference? If it works, it works. If it doesn't, it doesn't. Any thoughts?
00:42:16
>> I think these guys, they want to put chips down and options on anything they
00:42:19
don't have insight into so they can get investor updates, have a chance to work
00:42:23
with them. >> It's smart. Everything is so interconnected. Those graphs that look
00:42:27
like, you know, a god's eye. Remember those in the 70s where everyone is invested in everybody else and
00:42:33
everybody's suing everybody else. >> Yeah. Just like Anthropic is doing a
00:42:36
deal with Musk. Not everyone was like, "How dare you, Dario?" I'm like, "Are
00:42:40
you kidding?" Of course he did. Of course they do. They don't. They like
00:42:44
beef and then they hug. It's like the mob. Anyway, um one uh one more quick break. We'll be back for predictions.
00:42:52
>> Support for Pivot comes from Mint Mobile. Our money does a lot for us. Unfortunately, a lot of phone companies
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extra. We'll see Mid Mobile for details. >> Okay, Scott, let's hear a prediction. I
00:43:54
will note that people should something we have talked about and have been in our predictions. A New York Times
00:43:59
investigation, which you should all read, found that over 80 poly market users have placed bets with suspicious
00:44:04
characteristics and won money across nearly 30 topics. There the insider trading stuff of this stuff is just
00:44:10
getting started on all these predictions markets. So, we we thought this might happen, but that just just please go
00:44:17
read that because it's a really interesting piece. Go ahead, Scott. Prediction. Speaking of predictions.
00:44:21
>> So, my prediction, Chipmakers, Sarah Bros, Cerebras, Sarah, I don't know.
00:44:26
Chipmaker Sarah Bros went public today at a $40 billion valuation. And that's
00:44:30
up from its $23 billion valuation. Um, uh, in February and 8 billion in 2025. And, uh, I believe it's over. I
00:44:41
believe it's playing into this massive historic runup in chips. And after an
00:44:46
initial pop, I think it'll fall. Since last year, its revenue has increased less than 2x while its valuation has
00:44:53
increased uh sixfold. And the $40 billion valuation implies a 76 times revenue multiple. In other words, it's
00:45:01
this shouldn't be a public company. It's it's it's drafting off of what has been
00:45:04
an unprecedented increase in value in the sector. So, as an example, Nvidia trades at 26 times revenues and still
00:45:11
controls 85% of the AI chip market and is growing faster. Cerebrush tried to go public in 2024, but withdrew their uh
00:45:19
filing at the last minute over intense scrutiny of its heavy reliance on a single customer, the Emirati AI firm
00:45:25
G42. I don't if you remember these guys. It's basically like actual giant big
00:45:30
chips, physical giant big chips. It strikes me as quite frankly a shitty company. And this is this is simply u
00:45:38
massively benefiting from an unprecedented updraft in chip stocks. And anyways, my prediction is that the
00:45:46
initial pop, this company, which I think is actually a fairly mediocre chip company trading at 78 times revenue is
00:45:53
not going to sustain. And >> I like a highly specific stock. And then that that same customer which makes up
00:46:01
the line share of the revenue, group 42, accounted for 24% of revenue last year and uh stateowned UAE University
00:46:09
accounted for 62% of revenue. Given what's going on in the UAE, given their dependence on one customer, given the 76
00:46:16
times revenue, this feels like one of those bad Chinese firms that could just go down 95%.
00:46:23
>> Yeah. Yeah. Well, it's a good warning for people. Anyway, there's a lot of
00:46:26
froth happening for sure and and so there it's hard to separate the good from the bad. Anyway, we want to hear
00:46:32
from you. Send us your questions about business, tech, or whatever is on your mind. Go to nymag.com/pivot
00:46:37
to submit a question for the show or call 85551 pivot. Elsewhere in the Karen Scott universe this week on Profit
00:46:43
Markets, Scott spoke with Aswath Deodorin, a professor of finance at NYU's Stern School of Business, one of
00:46:49
Scott's favorites to break, and he's terrific. I think so, too, to break down
00:46:53
what's standing out to him in the markets so far this year. He shared his thoughts on how the conflict with Iran
00:46:58
could ripple through the economy. Let's listen to a clip. The catastrophic risk
00:47:02
here is not that oil gas prices stay higher than they were before the conflict is whether they'll go even
00:47:08
further up because there is that chance of that happening. I think if uh you know in many ways what the market seem
00:47:15
seems to be building in is the economy can survive with gas prices being 450 or five depending on what part of the
00:47:23
country you're in and that it might not be as robust as you thought it was 3
00:47:29
months ago but it's okay but I think the the the worry still remains that this
00:47:34
crisis while it's in a slow boil at any point in time could become a fast boil
00:47:39
at which point you could say what what happens to earnings now. >> Yeah, that's interesting. Four 455. I've
00:47:45
seen 67 now. It's really across lots of cities. Anyway, uh that's the show.
00:47:50
Thanks for listening to Pivot. Be sure to like and subscribe to our YouTube channel. We'll be back next week.