00:00:00
Would you buy into it? I mean, this will be a monster IPO. Every CNBC will just sit there touching themselves talking about this for three
00:00:06
weeks. Hi everyone, this is Pivot from New York Magazine and the Vox Media Podcast Network. I'm Cara Swisser
00:00:17
and I'm Scott Galloway. I have returned to our country, Scott. Yeah, you look much better. Um, how was
00:00:23
your travel back or your trip back? It's like takes, you know, you leave yesterday and arrive or no, you leave
00:00:30
tomorrow and then you arrive today. I don't know. It just like I I left at 10:00 a.m. and then I got back. It was
00:00:36
the same day at 10:00 a.m. That's all I know. It's funny cuz I I can confirm you have not aged since yesterday.
00:00:42
We got a lot to get to today, including Nvidia making history. Kind of crazy. And Elon making Graipedia. Oh my god.
00:00:50
But first, OpenAI is finally a for-profit company. I knew this would happen. Elon tried to stop it, but
00:00:56
announced this week that has formed a public benefit corporation similar to the structures of AI XAI and Anthropic.
00:01:02
Under the new setup, OpenA's nonprofit foundation gets a 26% stake worth about $130 billion and will run uh the
00:01:10
forprofit arm. Micro, but it's the same board, by the way. I think Microsoft gets 27% and keeps exclusive rights to
00:01:16
open a tech through 2032. Sam Alman reportedly does not have a significant stake. I I I feel like he's going to do
00:01:23
just fine. There's a buzz about an IPO as early as next year, possibly at a trillion dollar valuation out of the
00:01:30
gate, but also saying there's no specific time frame yet. Um, talk a little bit about this because we've talked about the idea of them going public and this looks like and and a lot of companies not going public and I just
00:01:42
want to note OpenAI is also sharing estimates for the first time. This is a drag on them, I think, how many chat GBT
00:01:48
users are struggling with mental health issues. The company says in a typical week about 07% of users show possible
00:01:55
signs of mental health emergencies. And while that percentage sounds small, remember Chat GPD has 800 million weekly
00:02:01
active users. OpenAI says they've consulted with more than 170 mental health experts to help improve responses
00:02:07
during quote challenging conversations. Uh Character AI, which is probably the worst of them, is barring people under
00:02:13
18 from using its chat box starting next month. You're kidding. Character AI uh long time coming. should have happened
00:02:20
right at the start. Um, so these are a drag on these companies too because these companies do know much more so
00:02:26
than a Google mental what people are asking specifically uh about. So talk a little bit about the IPO and possible drags on I would say this would be a drag on it but maybe not. I think it's
00:02:38
actually good that they're releasing this data and supposedly some people have said although that the chatter has
00:02:43
calmed down that the number one app of AI was therapy and so if you can imagine a significant portion of those 800
00:02:49
million people are using it as a therapist you know 07% of users showing possible signs of mental health emergencies that just may be representative of the population who wants to talk to a therapist digitally
00:03:02
or in person so I don't I don't they should be governed by therapy rules if they're going to be a therapist this, but go ahead.
00:03:08
I think that's I think that's a really good point. Can you say more about what that means? I don't I don't know what that means. When I was doing the parents of one of
00:03:14
the kids who committed suicide, the chat GPT parents, she happens to be a therapist. And she's like, "If I had
00:03:20
given this advice, I would have been arrested." Um, therapy therapists are governed by, you know, there's lots of
00:03:26
bad therapists, by the way, let's be clear, but they have repercussions if they are. Um and so they have first of
00:03:32
all privacy issues and uh your pri it's just the these people have no what you put into open AI is not doesn't have any privilege just like legal stuff financial stuff
00:03:44
that's one and then this and or privacy and then two they don't they're not governed if they do something wrong if
00:03:50
the AI bot says something wrong like they have um there's no repercussions for it um and so therapists are governed
00:03:58
people are governed if you if you shame someone into suicide, you could be tried for it and have people have been. And so
00:04:05
that's the issue. They have none of the they have all the usage and none of the responsibility, I would say. So if
00:04:10
they're going to do mental health work with people, they should be licensed therapists and should uh pay the price
00:04:17
if they [ __ ] up. Look, I agree with that. I I think that more broadly they should have adopt a
00:04:24
similar approach that most content or the military or bars um put in place and that is there should be different
00:04:31
versions of AI and you have to show your age and your identity and if you can't prove you're over the age of 18 you get an entirely different set of algorithms
00:04:42
and you know processing and warnings and also I think kids like if I went in tried to buy beer under the age of 21 and I got caught. They call the cops and
00:04:54
my parents get to know, right? Yeah. Exactly. And my parents weigh in and say, "Okay, you shouldn't be buying beer. Why are
00:05:01
you buying beer?" Or what or why did you try to buy a gun? Or your kid was here with a fake ID trying to get a driver's license, right? There's I think that it's pretty
00:05:12
simple. there needs to be a a different version of AI and there needs to be in my view I I've never bought into the notion of so for example I want to give the
00:05:24
right uh you know throw the right oone I don't think kids under the 18 should be allowed to engage in in gender
00:05:31
affirmation drugs without the consent of their parents right and in some when someone is under the
00:05:37
age of 18 they're a kid and kids are stupid they make irrational decisions their brains aren't fully formed.
00:05:43
May I point something out? Most this is almost every case they are. So that the proto it's a very rare case and it I agree with you. It's been weaponized and politicized but there are instances
00:05:55
where parents found out after a lot of other adults knew and that that is wrong. I think when
00:06:01
you're under small it's like the number of trans fencers but go ahead. I know but it but I'm saying just
00:06:06
theoretically it just shouldn't happen. What I'm saying is there there should also be no kid who types in how to kill
00:06:13
different ways to kill yourself and not have their parents notified. Right. Exactly.
00:06:18
Using them. They shouldn't be using them. I mean, there's only one way. Or use them for Well, look, use them for homework, use them for research. They're
00:06:24
just, for example, if you're under the if you go to a movie and you're 12, there's certain movies you can see and
00:06:30
certain ones you can't. It shouldn't be any different here. There should be a certain type of AI that that miners can
00:06:36
have. Not and I mean do you know what's going to happen? Do you know how a 17-year-old boy is going to start using AI now?
00:06:43
Yeah. I mean it's going to be insane. Yeah. erotica and stuff that you know they had a great piece in the New York
00:06:49
Times with the guy who was in charge of that how it h they they're very they have a lot of insight into what people
00:06:54
do compared to you know Google you go you search it you know like I don't know bondage or whatever you search but you don't really know what they're doing in this case it's very very explicit what's
00:07:06
happening in the search and so it's a very different ball of wax talk a little bit about the about the public offering
00:07:12
though because this is going to be the blockbuster right we predicted this I mean I personally think all this stuff around we need 50
00:07:19
nuclear power plants just open AI. I think what he's saying is my business is going to be so big, bad, awesome, and valuable. I'm going to need 50 nuclear power plants. I don't think he has any
00:07:30
[ __ ] idea at this point how much power they're going to need. I mean, generally speaking, there's a there's a there's a a bunch of catastrophizing
00:07:37
about how we don't have enough power. And my thesis is China's just going to develop AIS that or LLMs that use a lot
00:07:43
less power. But in also signing a $300 billion deal with Oracle, what does that say to the market? It says, "Oh my god, he thinks it's going to be he knows more than us. He thinks it's going to be a
00:07:55
trillion dollar revenue company and all of this, he is a very bright guy." And to be clear, he is focused on nothing but his quote unquote insignificant
00:08:07
stake in AI. and his insignificant stake might be only five or 6% but of a trillion
00:08:14
dollar valuation which it might get he's going to make 50 or $60 billion and he has energy companies and he has
00:08:20
blank blank I just love how we continue to fall for the hush tones and oh I don't get paid he's going to make a lot of money I don't get paid it's that's why I'm doing this yeah he's getting paid
00:08:31
but meanwhile I've decided that porn for kids synthetic porn lielike porn for kids is good for the world and is helping the original mission of using AI to improve and protect humanity. I mean,
00:08:45
when do we clue in and realize everything these guys do is to get the incremental dollar. And absolutely. And in my view, that's fine as long as we recognize it, regulate them, and then
00:08:57
tax them such that we can reinvest. Yeah. Whenever they say we're not here for the money, I'm like, you're here for the money.
00:09:03
Oh, no. I always tell kids, the only reason I appreciate Trump, it's like, how much money can I naked? Yeah. He's transparent. I've
00:09:09
always said any I've always said the VCs who get on stage at business school and say, "Well, it was never about the money would [ __ ] their sister for a nickel."
00:09:15
But anyways, oh my god, these Okay, that's not fair. 10 cents. So, look, this is where the IPO markets
00:09:24
are right now. The IPO markets are essentially branding events. He is an amazing brand builder. He's done a great job being in the news. OpenAI is the leader in what is considered the
00:09:34
tectonic shift in the technology. Also, the capital needs of this company are so extraordinary cuz it's a capital war
00:09:41
right now cuz I think they've all figured out there's probably going to be one in the seven dwarves and it's a
00:09:46
capital race. And by the way, the last stop on the valuation train the only people investors willing to pay a trillion dollar valuation for a company with 10, you know, that's
00:09:57
he's got to keep it hyped. In other words, that's going to be 50 to 100 times revenues. It's going to be it's probably going to make Palunteer look like a
00:10:04
value stock. And the only people willing to pay that are going to be retail investors. Retail investors who like why not buy
00:10:10
open AAI and just hold on. And so we said I think I said two months ago when he announced this deal with Oracle,
00:10:17
I'm like this means he's going public. Yeah. Because the only way he could ever even begin to deliver against those that $300
00:10:24
billion agreement for compute is if he went public and raised, you know, 100, you know, 50 or 100 billion over the next few years. He has to be he has to be Google. He
00:10:35
can't be Netscape. He's got to be Google, right? This is his his move. Even though there's other competitors
00:10:40
and everything else, they they have got to maintain the lead perceptually and actually, right? In terms of um in terms of quality enough, they don't have to be
00:10:52
the very best AI, I guess. It's sort of like Microsoft. They have to be a very good one. Um but they have to keep the
00:10:58
brand. They have the branding lead still. I don't think you think of anybody else. Um people can't cannot
00:11:05
name other ones sort of unless they can say anthropic I guess but it's people who are actively using it or regular
00:11:11
people think chat GPT and I have I have absolutely I think we should do away with the class uh the
00:11:17
classification as a public benefit corporation. Yeah. I think it is such [ __ ] jazz hands. Explain what that is for people who don't know what a public
00:11:28
it's defined as a corporation which is something along the lines of intends to produce
00:11:34
public benefits or public good and operate in a responsible and sustainable manner balancing financial returns to
00:11:40
shareholders with a broader public interest. This is like British petroleum in the odds and beyond
00:11:46
BP is beyond petroleum. and they'd show some Asian dude in a lab coat working on algae.
00:11:52
And and we were supposed to forget that 99.7% of their R&D was this drilling mower for fossil fuels. And finally BP just said, "Let's stop [ __ ] pretending. We're an oil company. Everybody needs
00:12:04
oil. They interact with it every day. They're willing to pay for it. We're not doing anything wrong. We're complying
00:12:10
with lies. We're complying with laws." Lies, too. We're complying with lies. That was a bit of a Freudian slip. That's what my
00:12:16
favorite Freudian slip was Senator Warren Freudian slip. What did she call Trump? C the C word. Anyways,
00:12:22
yeah, they are really just want to say that word and a bunch of VCs here in New York started calling their companies public
00:12:28
benefit by the way who enforces that who decides whether it is such it is such marketing and BS. And so what I would like to see is all right you want to call yourself a public benefit corporation there are certain guardrails
00:12:40
here. one you uh pay at least an AMT an alternative minota you're at least a good a good taxpayer right you have I don't know you are never you never get
00:12:52
more than x number of complaints about x or y or otherwise just call yourself what you are always get this much money returned to shareholders you could do all manner of
00:13:02
things the co doesn't make more than 50 times the average worker's salary instead of 800 right you could come up with a
00:13:08
series of things if you're really serious about quote unquote the benefit of the public here. Here's a few ideas.
00:13:15
Yeah. One of the things is that they started that way, right? And so they kind of had to keep they couldn't like predict. Elmo must was like this is
00:13:21
[ __ ] and he was right like in that regard. But they did manage to jam it through and there was a lot of like he
00:13:27
was jinning up all kinds of trouble and state attorney generals were looking at it and so they managed to jam this thing
00:13:33
through which shows how talented they are. meaning they are the farthest away from public benefit uh in terms of
00:13:40
personality. Um but we'll see. We'll see where it goes. We'll see. Would you buy into it? Would you buy or not? No. Yes.
00:13:48
Oh, if I could get into the IPO, I would do I would do it, but I would do it as a trade. So, you buy and sell?
00:13:55
Yeah. Because what they'll do is they'll they'll get I mean, this will be a monster IPO. every CNBC will just sit
00:14:01
there touching themselves talking about this for 3 weeks and then and then that's good and then and then the thing goes out they they what IPS do right now is they
00:14:13
check in with the bankers every other minute and they go we want to price it such that we can manage a 20 to 40% pop
00:14:20
right out of the gates and maybe more now Chesy priced it too low and it was up 120% Figma went up 140% circle those
00:14:28
guys didn't realize that was going happen. But what you want to be is this is what he wants the headline. He does not want the headline to be open AI flat in in in IPO debut. What he wants is
00:14:40
open AI surges in in IPO. That is a branding event that is singular and can only happen once or not. Yeah. So, it would the thing will be priced. They'll come up with some
00:14:51
[ __ ] thing where where they'll say that we're offering our users a chance and they'll let them they'll let them
00:14:56
buy $11 worth of stock and claim that they're letting their users participate. You made $14. Yeah.
00:15:02
And then they'll run around the world to the biggest hedge funds and biggest instit. They'll go to Black Rockck, State Street, and the bankers will make
00:15:07
a [ __ ] ton of money. It'll be a huge branding event, but right out of the gates, I bet it's up 30 or 60%. The problem is if I got access, which I
00:15:14
don't think I'll have given that I have this podcast where we're constantly critical of them, but the people, the institutions that get in will, some of
00:15:22
them will hold. Most a lot of them will sell and then the retail investor, the guy or gal on the street will buy at
00:15:28
that first trade. That will probably not be a great price to buy in at, but you know, we'll see.
00:15:34
We'll see if they'll give Scott some. All right, speaking of high stock market, let's go on a quick break. When we come back, Nvidia hits yet another
00:15:39
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at odo.com. That's odo.com. Scott, we're back. Nvidia just became the first company in history to hit the $5 trillion in market value a little
00:16:22
over three months after it hit the $4 trillion mark. To give you some perspective, Nvidia is now worth about 25 Disneys, 50 Nikes, or bigger than the
00:16:29
GDP of Germany. It's been a busy week for Nvidia. The company is also taking a $1 billion stake in Nokia. Oh, that
00:16:36
seems I'm not loving that move. Plus, partnering with Oracle to build the energy department's largest ever AI
00:16:42
supercomputer and Nvidia's annual conference. CEO Jensen Wong took an opportunity to lavish praise on Donald
00:16:48
Trump. Why wouldn't he? Trump has made him really rich. Uh, let's listen. President Trump gets deserves enormous
00:16:55
credit, his pro-en energy initiative, his recognition that this industry needs energy to grow. It needs energy to advance and we need energy to win. His recognition of that and putting the
00:17:07
weight of the nation behind pro- energy growth completely changed the game. If this didn't happen, we could have been in a bad situation. And I want to thank President Trump for that. Oh my god.
00:17:19
Let me interpret for all of you out there what he was saying. Yeah, Mr. President, let me sell my [ __ ] to
00:17:25
China. Yes, that's exactly what I was saying. Let me sell my Okay. Weapons. Greater likelihood they can hack our systems. cyber attacks
00:17:37
an increased probability they're able to invade Taiwan in a hot or a cold war using our GPUs
00:17:45
which American universities and IP protection have made me worth more than Boeing. Let me sell my chips into China
00:17:53
and ignore all of the concerns from the defense I've gotten off of you. You know, let me tell you something. I knew
00:17:59
I've known Jensen for a long time and he I interviewed him many times when he had the company was just selling chips to
00:18:05
video game companies essentially. He will not do an interview with me. I've I've known him 30 years. Like he refuses
00:18:13
because I'll be like, "So, let's talk about China. Let's talk about President Trump. Let's talk about you know,
00:18:19
he's smart." Yeah. I It's just like actually, you know what? I I lost a lot of respect cuz I like Jensen, but boy is he like
00:18:26
he should go actually he should go on your show cuz he'd be fine. I would agree, but he won't because I because I know him, right? Like talk
00:18:33
about someone I've known for like just I I I it's fine if he wants to do it this way, but you know, it's some he he he
00:18:41
probably looked at a Cisco or something like that and and is so much smarter like that. He he speaking of wanting to
00:18:47
keep you know, he doesn't want AMD to show up. He doesn't want Apple to make. He wants to control. He wants to avoid
00:18:54
the mistakes of Intel over the years. You know, he kind of wants to own it for the next for the future essentially. So,
00:19:02
sucking up to Trump, he'll do it. He has no problem doing it. I mean, though he dresses like a like a very
00:19:08
attractive lesbian, I think, but go ahead. I'm sure that's what he's going for. That's what he says. Look at that
00:19:13
outfit. Look at that. Hot lesbian. That's That's what I want my closet to look like. Go doing like the leather. I have that
00:19:18
exact leather jacket. But go ahead. Look, you got to give it to the guy. He's created more shareholder value in a shorter time than any person in history.
00:19:25
And he's created tremendous He's He's made thousands of people millionaires, if not tens of thousands. He's created
00:19:31
an ecosystem. He's paying a [ __ ] ton of taxes indirectly and directly for the great state of California. A lot of
00:19:37
that, it's great that that ecosystem and he's sort of the ground, you know, ground zero for the ecosystem is happening in America. I think the guy
00:19:44
deserves a lot of credit. He seems like a very nice man. My Jensen Huang story is the following. I spoke on stage at
00:19:50
some thing at Can and a bunch of people lined up to take photos and this nice guy comes up and says, "I just love your
00:19:57
videos." And I was like, "The line was really long." And I'm like, "Boss, where's your camera?" He's like, "Oh."
00:20:02
Uh, and he pulls out his camera. We take a snap and I'm like, "I'm sorry, boss. The the the line is long." And I kind of shuffled him along. And the next guy
00:20:08
comes up to me and goes, "You know that was Jensen Hong, right?" Oh. And I'm like, "Jensen?"
00:20:14
Jensen, come back. Was this recently because no one really paid attention to No, it was like it was that's is that's
00:20:19
exact. It was like three years ago. Yeah, I got to say I always thought he was he was it was unusual for us to have
00:20:25
him at code because he wasn't that well known, right? But he was doing all sorts of innovative things in chips um when
00:20:32
others weren't and it was largely around video games as I recall, right? he was doing and phones maybe. Um but this his
00:20:40
whole situation has changed rather dra including that entire company which was sort of not as well known but yeah
00:20:47
but he has a feel he has a feel for brand one the leather jacket is not an accident that he keeps wearing it and
00:20:52
two his his annual meeting is now the new Berkshire Hathaway summit I forget what they called it
00:20:57
the investor relations there is is very good so he announced a bunch of promising new things AI and quantum computing infrastructure he announced partnerships with the US Department of Energy and leading US companies to build
00:21:11
AI infrastructure aiming to support scientific discovery and national competitiveness. He hit all the right
00:21:16
notes. AI supercomputers. He revealed a project to build an AI supercomputer for
00:21:21
the US Department of Energy with a reported 500 billion in bookings for AI chips. Construction. He needs to keep selling his chips. He
00:21:28
needs to keep selling us. He's really good at it. But he's still chicken [ __ ] You're a chicken [ __ ] Jensen, for not
00:21:34
talking to me. I'm not that rough. By the way, you know who the only politician is? The only candidate who
00:21:39
has refused to come on raging moderates. What? Who? The leading candidate for mayor of New York. He's the only person that said no
00:21:44
to us. Yeah. Anyways, why would he come on your thing? I would I really That's a smart
00:21:52
He won't come on mine either. He's one. Why Why take any risks? I would advise him to just just go with
00:21:57
friendly. I know. He won't come on mine either. It's weird. I I was in touch with him months and months and months ago when he
00:22:03
wasn't ahead. Oh, was he a babysitter? Anyways, the No, he was like pulling 2% at the time.
00:22:09
So, they revealed a project to build AI uh I'm sorry, excuse me, construction in America. They noted that their latest
00:22:16
chips, including Blackwell are now in full-scale production Arizona, reflecting new investment in
00:22:21
US-based fabrication and supply chain. That will be a lot of jobs. He emphasized at least in the short term
00:22:27
to construct it. He emphasized the importance of accelerated computing, national AI strategy. He's a rockar. He's the
00:22:32
re-industrialization. He they're hitting all the right words. Re-industrialization. So any kind of bubble? We have to move
00:22:37
along to Graipopedia, but any kind of bubble. Are you worried? Oh, yeah. Yeah. I mean, the fear isn't that these things go down. The fear is imagine Leo when he
00:22:48
was hanging on to that piece of furniture at the end. Mhm. When he was going down, took Kate Winslett and 400 kids down with him.
00:22:55
When he when he vanished into the, you know, the darkness of the depths. What if he had 11,000 arms and took everyone
00:23:02
down with him? Yeah, that's the problem. It's not that these companies correct and their stocks go down. That happens to every big tech
00:23:09
stock. That happens to every stock at some point. The problem is they're going to they're
00:23:14
take they may take the global economy with them down because 40% of the S&P is 10 companies which represents 20% of the
00:23:20
market cap of the entire publicly traded companies globally. So this is actually not everyone goes down.
00:23:26
Bergkshire Hathaway didn't. It's that's cuz he's so good. Like this guy's not. Actually, that's not true. At the depths
00:23:33
at the depths of the great financial recession. Oh, did it go down? When Bergkshire had been hit hard like
00:23:38
anyone else, if you did the calculation on Warren Buffett at that moment, he was flat. Oh, interesting. Now, within 14 months, he was now up again 23% since since his inception of
00:23:51
his fund. But no one gets out alive if this thing if these things if Nvidia we should hope keeping everybody up. Yeah. We should hope that OpenAI goes public at a really good market cap and that
00:24:04
Nvidia keeps to keeps announcing record quarters or that it's sort sort of a soft pullback because if Nvidia throws
00:24:12
up, I mean everyone else has the stomach flow. Yeah, Jensen, keep looking like that
00:24:18
lesbian you do. You're an attractive very attractive lesbian. Anyway, uh let's also talk about Groipedia, the
00:24:26
encyclopedia powered by XAI and his rival to Wikipedia. It sucks so bad. I tried it. I just couldn't. Has
00:24:32
complained about so-called propaganda on Wikipedia. He's been doing that for a while. Graedia went online with around
00:24:38
900,000 articles and briefly crashed after launching. It was full of like it loves Elon. It loves Elon, that's for
00:24:45
sure. It's full of errors. It leaves things out, like a lot of stuff out. um factual stuff. Um and it's does he have why is he doing this? Like does he have
00:24:57
just an extra five minutes to do something? I don't know. Um at the same time, Truth Social, which majority owned
00:25:03
by President Trump and his family, is launching a crypto-based prediction market platform to compete with Poly Market and I guess Kelshi. Uh Truth
00:25:10
Predict will allow Truth Social users to place crypto bets on outcome events. Uh
00:25:16
the guy in charge of the outcome events is going to have a betting platform. That's interesting. Um also I think John
00:25:22
Junior's on the board of both the poly market and or he's he's involved with them. Um and he I just I don't know what
00:25:31
to say. And the last thing about Elon, of course, Teso is looking for internal CEO candidates in case his trillion
00:25:36
dollar pay package is not passed and he leaves. So any predictions here? Any of these any of these topics? Graipedia.
00:25:43
Barrackipedia is an attempt to sort of establish a new truth, right? And one of the things I like about Wikipedia is
00:25:49
it's it's almost impossible to have a functioning democracy if we don't all agree that there is a an objective
00:25:55
truth. And the Congress used to fall in line when peer-reviewed research would come in or data would come in. They
00:26:01
wouldn't I mean they try and spin it, but they would acknowledge, okay, this is the data and we all need to rally around it. That's no longer the case.
00:26:07
Everyone's decided there are quote unquote alternative facts. there is an alternative truth. And I just see this
00:26:14
as an attempt to try and mimic what a lot of people, one of the things I love about Wikipedia, I was also I was
00:26:19
freaked out when my Wikipedia page went up cuz I thought there's no taking it down. That's the thing about a Wikipedia page. It goes up. And then what really
00:26:26
struck me was some misinformation went up. It said, you know, it's it said one of my companies was now defunct. I'm like, you know, no, it's not. It's still that company's still going. Other people
00:26:37
weighed in. It's a community- based thing. And if you show your notes and your work, you get to edit a page. So,
00:26:43
it's like this this kind of userenerated, but they're they do try to pursue the truth. I find it actually
00:26:50
quite apolitical, which I like. And what you see here, what you see here is they're saying [ __ ] like uh instead of instead of showing suggestions for gay pornography,
00:27:01
it it falsely suggests that porn exacerbated the HIV AIDS epidemic in the 80s. Yeah. I mean, something like that, that's just not helpful.
00:27:12
Why is he doing it? Does he care if he's helpful, Scott? Like, really? Seriously? Yeah, but I think you said this. I think
00:27:18
something happened to the guy and he's traumatized and angry at the left and wants I mean, he's talking about he keeps going on and on about a white genocide. Uh he's just I
00:27:31
I mean I I I use a lot of examples for how the term genocide has been perverted and overused in a lot of different
00:27:37
regions of the world, but there's very few perversions that are less egregious or laughable than that. Right now there
00:27:43
is a white genocide taking place. He's like a plot of White Lotus at this point. Like you know between him and
00:27:50
David Ellison they look like the the new next cast of White Lotus. Um but something it's just stupid. So why would
00:27:57
he why would he do this? Why would they? Because getting in on the action. I'm sorry. Say more.
00:28:03
Trump doing this on True Social. Truth predict. They've got to do something. The social media. Okay. This is their second pivot.
00:28:09
The the social media company doesn't work. No one's going there. So they pivoted to become a Bitcoin treasury company and they took their cash and
00:28:16
bought Bitcoin. That's sort of working. Not really. So their next pivot is to become a a betting market because there
00:28:22
is actually I do think there's opportunity for new players there. And you're going to see Poly Market or Cali
00:28:28
go out in a monster IPO. These things are the new casino, but they feel less dirty like, oh, it's about politics, so it's not just gambling. Yeah, they do everything. They don't
00:28:38
just do politics. But I got to give it to the guy. The stock is up 10% this week and 22% up this year. Tesla, the fact they're able
00:28:44
to keep this thing in the air just This is Tesla. Yeah, this is just amazing. and his stock package.
00:28:50
He's looking for a grant of up to 12% of outstanding Tesla stock, which could feasibly be worth a $1 trillion package
00:28:56
if the company hits a market value of 8.6 trillion, which I think is up six or sevenfold. I actually I think one of the
00:29:04
things about capitalism that I think works is you can't get in the way I don't think you should get in
00:29:10
the way of limiting compensation at a gross level. Yeah, I think if if if I I think you should continue to pub publish statistics showing what multiple of the average worker salary the CEO
00:29:22
makes. But I think one of the intoxicating things in the incentives that works in the United States is that
00:29:28
there's no limit on the upside. Well, here's the only thing this is. Look, first of all, it's offensive to
00:29:34
people. That's part of it. I mean, the the whole like handwaving part of it is offensive to people. So, he knows he's
00:29:40
doing that. He knows he's trolling people. The other thing is if it gets an internal CEO, we will all value it at
00:29:46
what it's worth, right? It will not get the Elon bump and yeah, it look like an auto company and it's not selling as many cars and it's not as good and it will become what it's worth.
00:29:57
Correct. A very good car company that has seen better days. And you know, one of the things that it's cost there was
00:30:04
another Yale study out showing that his involvement is costing them I guess 1 million cars or something some number.
00:30:11
It was a massive number. Um, so he's also a downside candidate. I think him out of there would be great for Tesla as
00:30:18
a car company. But you're right. Not for the stock, but what I where I was going with this $1
00:30:24
trillion pay package and and you did something you almost never do. You didn't let me finish. That's really unlike you.
00:30:29
Oh, yeah. Right. Anyways, do you like what you on the talking? Is there a period coming? Anyways,
00:30:36
73% Scott, but go ahead. I occupy 73% of the words. That's right. Is that right? Yes, you do. Yes, that's correct.
00:30:42
Oh, now I feel ashamed. Don't worry about it. Anyways, where I was going with it is I like the idea of some of CEOs and people
00:30:51
making extraordinary amounts of money at a gross level. I also believe and this book kind of changed my life you know Daniel Conorman's
00:31:02
you know thinking fast and slow and that his his research around money above a certain amount you don't get any happier and the whole point of a good tax is a tax that is the least taxing possible I
00:31:16
believe the two least taxing taxes are the following over $10 million in revenue or from stock op income from current income or from stock trades or
00:31:27
selling your stock in Tesla. I believe we should have an AMT of 60 or 70%. And everyone grabs their pearls when they hear that. That's the tax rate for that. I just grab my pearls, but go ahead.
00:31:38
That's the tax rate for people making over a certain amount of money for the majority of the last
00:31:43
century, folks. When the when income inequality was not as out of control, when people felt better about America,
00:31:49
when we weren't cutting off food payments to kids. So, I I just don't because here's the thing. The person
00:31:55
who's being taxed at 60% who made $2 billion in in in equity grants, they're no less happy. But that $2 billion divided among call it uh uh you know
00:32:09
100,000 households. That's $20,000. $20,000 in universal child care credits, food stamps, vocational training, PEL grants. Everybody's happy. that makes them
00:32:20
significantly happier. Mhm. And then the other one I can't stand is we should eliminate the deduction uh
00:32:26
pull the deduction on inheritance tax down from 30 million to 1 million. If your kid inherits 7 million instead of
00:32:33
11, he or she is no less happy. And there's going to be such an immense transfer of wealth and that needs a lot
00:32:40
of that needs to be in reinvested back in the middle class. Anyways, my point is gosh, you know you you know who you sound like? Zoran Mandami. But go ahead.
00:32:46
He hasn't talked about any of this [ __ ] You mean what? Government sponsored food. When you said 60%, I was like, "Ow, no."
00:32:54
Like, I am uh I think taxes should be lowered on what I'll call the working wealthy. I
00:33:00
think taxes should be lowered on Cara Swisser. You make an exceptional living, but living in DC, you're probably paying 51%
00:33:08
of your income to taxes. That is correct. Whereas, I'm self-conscious saying this. Scott
00:33:14
Galloway who now makes all of his money from selling stocks and is a Florida resident. I'm paying about 20%.
00:33:19
I know that makes no [ __ ] sense. Your fair share. You're not fair. That makes no [ __ ] sense.
00:33:24
I would agree. In fact, I think you should write me a check. That's what I think should happen. Anyway, we we have
00:33:30
to move a trillion dollars. Just put 600 billion of it back in in the Treasury. Is he going to get that?
00:33:37
I think they're all against it. I think the board I think he's going to get most of it. So the board can say we took a
00:33:43
stand and didn't give him what he wanted and I think he'll get most of it. So what if but what if but a lot of these
00:33:48
groups the shareholders are rejecting it. What will he quit? He'll quit right presumably. Yeah. But you'd have to get over these
00:33:54
shareholder votes. Sometimes they're non-binding. I haven't looked at the bylaws but for example every year sir
00:34:01
Martin Sell's pay package was rejected by the shareholders of WPP and he was like honey badger don't give a [ __ ]
00:34:06
Yeah. And then they'd go back and then the next 11 months of the of the, you know, year would click by and no one
00:34:11
cared. So, but he cares if he loses he's gonna like stock off. I know, but he'll stock off.
00:34:17
But these shareholder votes are typically non-binding. It's the board that is supposed to take them into consideration. And the compensation
00:34:24
committee, which by the by by the way, I still maintain the hardest thing as a manager or the hardest thing for me,
00:34:30
harder than clients, harder than hiring and firing, compensation. Yeah. Compensation. It is so difficult to to
00:34:37
figure out the right number, keep people motivated, be fair, have the money to manage the company. How much do you pay
00:34:44
employees versus shareholder? It's really So, is he going to get this? Is he I think he's going to get most of it. I
00:34:50
don't think I don't think he wants to give up the the mantle at Tesla. Also, if he leaves, and I think he probably knows this,
00:34:56
if this company starts trading like an automobile company, it loses 90% of his value and the majority of his net worth is in this company.
00:35:02
Yeah. He's got to stay there. Stop whining. So they both it's quite frankly it's a bit of a suicide pact and that is
00:35:08
the board knows if he leaves the board's Here's the good news for him. He's invaluable to the company. Here's the
00:35:14
bad news. He's invaluable to the company. That's correct. And the majority of his net worth is tied up in Tesla. Yep.
00:35:20
This board will do a symbolic haircut. They'll give him, you know, 50 70 80% of the of the trillion dollar potential upside he's asking for. But this board, and I've seen this happen, they have
00:35:32
made so much [ __ ] money with this guy. They all want to name their their first child after him. You know, these
00:35:38
are these executives on the company. I mean, they're talented executives who But they're not that talented.
00:35:44
Yeah. I mean, they're probably people who are really good at what they do. Had three or five million, and now they're buying [ __ ] yachts cuz they they they
00:35:50
met this crazy guy. Yeah. We're talking to you, Robin Denholm. Possibly the most egregious
00:35:56
board chairman of history, but you made a lot of money. Good for you, Robin. Anyway, uh let's go on a quick break. When we come back, we'll talk about the latest tech earnings. We're going to run through them really quick.
00:36:08
Support for the show comes from Apple. Before the show was even a podcast, all I had was an idea. And once I had that,
00:36:14
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00:36:21
has been static, a constant in all of my business is Apple products. They just work. They send the right signal. Uh it sounds sort of strange, but they make me feel good about myself. They make me
00:36:32
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apple.com/mac. Scott, we're back. It's time to do some rapidfire highlights of the latest tech earnings. First up, Microsoft. The company's Azure cloud service saw revenue jump 40% in the quarter.
00:37:03
Amazing. And the total revenue rose 18%. Shares are up around 2% as of the last 5 days of the taping. As for Meta, the
00:37:09
company saw a 26% rise in sales year-over-year and net income of $2.7 billion. impressive which but it still didn't meet expectations. Meta blamed the net income shortfall and onetime tax
00:37:22
bill spill but also warned of growing capital expenders are spending enormous amounts of money on AI. Shares are down
00:37:27
12% at the time of the taping. They got a real haircut there. Lastly, Alphabet, the Google parent company, saw 16% jump
00:37:34
in third quarter revenue, topping hundred billion in quarterly revenue for the first time. Uh really amazing. Cloud
00:37:41
revenue for the year rose 35% from last year. uh a little less than um uh Microsoft's shares are up around 3% uh at the time of the taping. Uh anything
00:37:52
sticking out for you? And we'll note that earnings for Apple and Amazon are coming out after we record today. Um we
00:37:59
by the way Amazon's laying off 14,000 corporate workers as it invests more in AI. Um but any thoughts on on on not
00:38:06
We'll talk about Apple and uh Amazon next next week, but what uh what do you think about these three the three
00:38:12
biggies? Nothing short of extraordinary. Advertising revenue at Meta up 26%. And
00:38:18
you want to know why your employer is dying? CNN or your partner CNN. Instagram video time was up 30%. Up 30%. And
00:38:28
that's much of that is me watching it, but go ahead. I I hate to say this. I'm embarrassed to say this. People constantly ask me,
00:38:35
"What are your what are your sources of news?" And I always say the BBC, the FT, and The Economist, which is all a
00:38:40
[ __ ] lie. Well, you do watch those. I subscribe to them so I can signal. For me, they're self-expressive.
00:38:47
I read those. But go ahead. When I go to Breakfast at the Crosby, I take my FT because I think it makes me look smarter than I am. And I barely
00:38:52
read it cuz my eyes are going. And then I go back and I watch reals on my phone and I watch the Gioar or Justin Wolfers
00:39:00
or a real from some economist or or YouTube or David from or and and these little
00:39:06
two and three minute hits of really thoughtful people on YouTube and Instagram. That is now where I'm
00:39:12
getting my news. I hate to admit, you and I both, you and me both, and they will take the best articles and they'll summarize them for them and
00:39:19
they'll put someone better looking to to explain the article or more articulate. Remember when the New York Times started
00:39:25
doing video about 10 years ago? Mhm. It was like, "Oh my god, that guy that guy writes so much more handsome than he is." You know, you think you That's why they That's why they glowed
00:39:37
up Ezra. They're trying to when you find someone when you find someone like Ezra
00:39:42
who's handsome and kind of dreamy in sort of a metrosexual way. He wasn't even close to this dreamy.
00:39:48
They've glowed him up. But like an Andrew Ross Sorcin because I I worked with a lot of these journalists
00:39:54
at the New York Times. I'm like Jesus Christ, Swipe left a billion times. Yeah. Yeah. And and then you they put them on camera
00:40:01
thinking everyone would want to talk to the journalist and you're like oh god. No. Anyways, and
00:40:06
anyway, so get back to the these are kids who were traumatized and found All right, get back to revenue
00:40:13
at the school newspaper. The stocks are not that up. The stocks are Yeah, but people are anticipating this.
00:40:18
Um the capex at Meta, you got to give it to him. He is not afraid to make unbelievable investment. His as a result though, the operating margins fell to 40% from 48. Capbacks reached 38% of
00:40:32
revenue. That is crazy. I mean, Apple, I think, in the high single digits most of its life.
00:40:37
Mark, I'm going to pay you a comment. You are a baller. I have to say he's like, I'm going this way. He's not
00:40:42
scared. That's what control is about. He has full control of that company. So, he can do whatever he wants.
00:40:48
He's one of the great business minds of the last hundred years. Unfortunately, he's done more damage to young people, won't make more money than almost any person in history.
00:40:53
Thank you for noting that. Yeah, their capex drew the har the harshest market reaction. He doesn't care. Um, if
00:41:00
you look at their valuation, it's up 25% year-to- date. It has some show me risk
00:41:05
now, but for the most part, it's just unbelievable and had can make these staggering investments. They have the
00:41:11
cash flow. Alphabet, the thing that really struck me here, okay, cloud revenue 34%, up 34%, net income up 33%.
00:41:20
Their income up 16%. And all of this fear, this existential risk of AI is going to ruin the search business. The search business was up 15%
00:41:33
this quarter. Up because they have a lot of AI embedded in it. Now, it's not only growing, it's growing faster. Paid clicks increased 7%
00:41:40
yearonear. I mean, Google Cloud, I got to say, their AI is getting better, isn't it? When you search now on
00:41:46
Google, they're like, "No need to go to chatpt here. say it was terrible and now it's good. I
00:41:52
don't say it's as good. It's not as good as chat GPT. It's not. It's not. Their Google Cloud backlog, which is
00:41:57
basically business that they've signed up, was up 46% quarteron quarter. Up 82% yearonear.
00:42:05
Over 70% of existing cloud customers now use Google AI products. And the company signed more than a billion dollars in
00:42:10
deals this year than the prior two years combined. It's also their cloud unlike the Amazon cloud which AWS has had a real issue with which was the which is still the number one by gross dollar
00:42:23
volume. But what Gemini are has done which is really smart is they have made it quote unquote the AI cloud and it's
00:42:31
become the preferred platform for AI workloads. Google offers AI startups $350,000 in
00:42:36
cloud credits, access to its technical teams and go to market support and nine out of the top 10 AI labs use Google's
00:42:43
infrastructure. I mean these guys can I make a note many years ago when AI when when Amazon pulled forward in the
00:42:51
cloud market I had lunch with Sundar Pachai who's the CEO and I was like you really missed the boat on this cloud
00:42:56
thing and he was like we did because we were using our cloud for our own search services right and he's like we had so
00:43:02
much business over here we didn't pay attention I'm like you should go in a cl like you missed the cloud turn and since
00:43:08
then I have to say they have recovered rather nicely I would say I like in Microsoft a revenue on a big number up 18% Azure again as goes the
00:43:21
cloud goes the stock in the company Azure revenue their cloud offering was up 39% year-on-year topping Wall
00:43:28
Street's 37% estimate Azure remains the core growth driver for the company he expects to double Satcha said he expects to double its data center footprint over the next two years and these companies
00:43:40
there's just no getting around it they're extraordinarily wellrun stock or this seems flat flat like this. Do you
00:43:47
think it's going to keep running up? Well, I've said this over and over. It was my big tech stock pick for 2025. It's up 62%. In the last 12 months. So,
00:43:55
I think it's let me put it this way. The buying opportunity is over. It was trading at a P of 17, which made no sense. And now I bet it's up in the high
00:44:02
20s. So, I don't, you know, I don't I don't like to make Let me say I was a buyer last year. I'm
00:44:09
not a buyer right now. I'm not a seller either, but I'm not a buyer right now. Mhm. It's come up. It was undervalued a
00:44:15
year ago because of the quoteunquote exist. Everyone thought within a year Open AI that Google search
00:44:21
and it had gone from like 99 91 to 89. Everyone thought it was going to go to 50. It hasn't. Google search gets 96
00:44:28
times the traffic of chat GPT. It's big. It's big. And they've managed to be, you know, credit to apparently
00:44:36
Sergey Brin's spending a lot more time there. credit to them for coming back from that or making certain that they
00:44:41
didn't get their lunch eaten. Um, in any case, uh, last thing, CNN has launched its new subscription streaming service.
00:44:48
The service will be like, quote, close sibling of CNN's cable product offering access to select live programming for
00:44:54
$6.99 a month. Uh, it's not really CNN. I I think it's How is it any different? Uh, exactly. That's how is it any different? It's not It's not
00:45:06
Mark Thompson's idea. It's CNN with CN. Remember when it was PL and I said, "How can you have CNN plus without CNN?" This
00:45:13
has CNN. Oh, okay. Yeah, that's it. They have to do this. seven bucks a month uh and subscribers will be able to
00:45:19
access my idea and this was an idea that I I said desire you should have a bug on
00:45:25
CNN plus on their streaming thing where where you're just live streaming live CNN
00:45:31
and Mark Thompson implement this is typically what happens with managers you have one you have a business that works and you think that's the playbook for the rest of your life and he to Mark
00:45:44
Thompson's credit he moved the company he moved of New York Times from an ad-based model to not an entirely
00:45:50
subscription-based model, but the stock run up in the New York Times, which has been strong, not exceptional, but stock,
00:45:55
was largely because the revenue mix moved much more to subscription under the leadership of Mark Thompson. The
00:46:02
problem is it just may be too late. CNN is struggling even in comparison with other dying cable news networks. In the September prime time slot, get this, Fox News averaged 2.5
00:46:13
million viewers. That's flat. MSNBC 810,000 down 43% right and CNN averaged 543,000 down 36% and in the coveted 25 to 54 year old demo which
00:46:27
is all advertis the the people buying their product advertisers they only care about people 25 to 54 Fox News averaged 280,000 in the core
00:46:38
demo down 14% CNN averaged get this cara 87,000 yeah we're bigger I and MSNBC averaged 68,000. Our, if you look at our
00:46:48
downloads plus our video views, we're averaging, I think, around 350 or 400,000.
00:46:55
60 to 70% of our listeners are in the core demo. So, we're getting about 150 or 200,000 in the core demo versus MSNBC and CNN at 60. Tiny little cellves. We have like six.
00:47:06
We can fit everyone around. These sinks literally no one table. We did fit everyone around the table. And I I flew back. I flew back with Van
00:47:13
Jones last night and he said something really interesting. He said, "All we're doing is bringing on people, encouraging
00:47:19
them to yell at each other such that it gets clipped and goes on social and goes viral." Yeah. Which makes no money.
00:47:24
Which we know. But what he said that I thought was really insightful. He said just two years ago, occasionally we
00:47:30
would make news live. Something would happen live on the program that would make news and change things. Instead, it's like, how do we get this [ __ ] on reals and on Tik Tok and then it starts
00:47:43
having an impact? They're all just essentially a content creation machine hoping to get to clear the hurdle such
00:47:50
that it goes viral on one of these platforms. It's not a money maker, that's for sure. I don't think they'll sell many of
00:47:56
these. I got to say, I don't know. I think it's all like look they're all going to get bought up alto together
00:48:01
whether it's Comcast or David Ellison with his it's a trophy property though you know neo money which is yeah there's
00:48:07
a there's got to be a net billionaire who's a Democrat who's going to want CNN and be willing to pay for it unless Ellison gets it and then it just
00:48:14
disappear but what about a guy like Michael Bloomberg why wouldn't he buy CNN I don't know he's been a great steward of Bloomberg
00:48:19
News he's moderate he has the money I don't know I just I don't think they're really big businesses that's all
00:48:25
I think they're little businesses anyway Um, one more quick break and we'll be back for predictions.
00:48:32
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ready to help your business grow. upw.com upwork.com. Okay, Scott, let's hear a prediction. What's your prediction? I've been
00:49:34
I predict we're going to have a great tour coming up. It's one more week. And by the way, I predict your book is going
00:49:39
to be at the top of the New York Times bestseller list. Very generous. Thank you for By the way, can I just make an insight before you start? the back cover. Is
00:49:46
that your back cover that you sent? Yeah, that is wonderful. It's a picture of Scott as a teenager. I don't know how
00:49:51
old you are. 12, 13, 14, 13. And you and I love I thought it was both Amanda and I were like, "Wow, that was really
00:49:58
good." Thank you. It's a wonder. I didn't see the back cover. I love it. I love it. Love it. It's all Katherine Dylan. My partner for
00:50:04
the last 15 years in business has been a professor of the arts at the Tish School named Katherine Dylan. And she's she's a
00:50:10
creative. She teaches Well done, Catherine. She teaches visual design and she's essentially run uh my companies. In addition to being a great
00:50:16
manager, everything we do just has a certain level of aesthetic strength. It's very touching actually. It's very
00:50:22
hard to pull that off, but it was very touching. Thank you. Um so look, my prediction is the following. AI is now absolutely the
00:50:31
equivalent of corporate ompic. Um, and in that is what Osanic or GLP-1 drugs do is they turn off the switch, uh, kind of the instinctual switch that if there's food in front of you, you need to keep eating. And I hadn't realized how
00:50:45
obvious or how linear when you're on a board and the CEO is planning the next year and trying to get approval on capex and hiring, uh, he or she will come in and say, "Our plan is to grow revenues
00:50:57
8%." And that means we're going to grow our headcount 6%. because that'll increase profits by you know eight or
00:51:03
12%. And there was always a correlation and if they came in and said uh business
00:51:09
is tough I think revenues are going to be down 8% next year then okay we need to lay off between 6 and 12%. So the
00:51:17
corporate growth number the hunger if you will was always matched by how much calories you were going to intake or get rid of. And then Meta said using AI for
00:51:28
better targeting, they announced what I still believe is one of the most seminal earnings quarters in history. They said, "Okay, we
00:51:35
uh grew 20% I'm sorry, we grew 23% last year with 20% fewer people." So there's this entirely different gestalt in corporate America, especially among information age companies that says,
00:51:48
"Wait, just because I'm growing doesn't need I mean to doesn't necessarily mean I need to eat more. I I don't need more calories. I don't need more people. As a matter of fact, I may need I may be able
00:52:01
to pull off the ultimate gangster move for shareholders here. I'm not saying it's good for society, is that I can grow while reducing
00:52:09
my headcount." So, Amazon announced that they were uh doing a restructuring 30,000 corporate job cuts, roughly 10% of its white collar workforce to they say they're aiming to reduce
00:52:21
bureaucracy. Do you realize Amazon has said on the retail unit that they think they can maintain the same level of top level revenue or they can double their topline revenue by 2032 or 33 while
00:52:36
maintaining the same headcount. Yep. That's insane. It's insane. That's insane. So the corporate ompicking of AI is already underway. The
00:52:48
number of managers dropped 6.1% between May 2022 and May 25, while executive level roles fell 4.6%.
00:52:57
The average supervisor now manages six direct reports, double the number 5 years ago. And Amazon isn't the only
00:53:02
one. Meta cut 600 workers inside its AI division. Salesforce eliminated 4,000 support roles. CHEG reduced staff by
00:53:09
45%. Clara downsized 40%. Dolingo plans to replace contractors with AI. Target 1,800 people. Paramount 1,000. Intel 24,000. Nestle 16,000. All
00:53:22
announced reductions. And so some of this is a bit misleading because these companies went on a hiring spree after the pandemic. But these these moves are still pretty big. And as the market
00:53:34
normalizes, more workers are now moving down the ladder. 17% of workers who changed employers saw a pay cut in 2024.
00:53:39
That's up from 15% in 2023. The share of job changers taking a pay cut was even higher for tech. 18% managers 22% and managers transitioning to individual computer contributor roles is 32%.
00:53:52
Mhm. The the the hard part is who's next? So, I have some companies that I think are going to announce multi,000 uh excuse
00:53:58
me, multi,000 person layoffs. And I did a screen here. I spent some time on this. Etsy, Pinterest, Apple, Airbnb,
00:54:05
PayPal, and HubSpot, I believe, and that's is my prediction, along with a raft of other information age darlings
00:54:12
are going to announce,000 to 10,000 to 15,000 person layoffs in the next 90 days. Oh, wow. That's a big one. I in that
00:54:18
vein, I'm going to have to be laying you off, Scott. Uh, I knew it was coming. I knew it was coming. Yeah, that's a good one. I like that. Just to add on this, this has real societal implications because
00:54:31
unfortunately what you have is one of the greatest threats to democracies right now is that
00:54:37
the ratio of young people who are productive and paid more than their fair share of taxes is getting flipped upside
00:54:44
down in terms of its ratio to old people who are unproductive and don't pay their fair share. And without it used to be
00:54:50
12:1 to social security recipients. Now it's 3:1. And if it goes much lower than
00:54:55
that, we're not going to have the money. 40% of our entire budget now goes to payments for seniors, right? And
00:55:00
unfortunately, our tax code encourages in our stock market, which drives everything, is now encouraging people to
00:55:06
hire robots, not people. And the thing about robots, Cara, they don't pay social security or payroll taxes.
00:55:11
Yeah, we're going to tax them. We've got to tax them. We've got to start taxing robots. That's a Bill Gates idea. Can I just say
00:55:18
in this nature of what you're saying is I sent Al Alex is um doing great in school and he's a he's a mechanical
00:55:24
engineer. I think he'll be just fine. But um I I sent him the note about GM laying off a whole bunch of people too
00:55:30
in the EV area that largely because of the tax credits uh etc. He goes, "I love how all young people are being outco
00:55:36
competed by experienced workers and AI. So there is a zero opportunity for even the most qualified. Do you think we are
00:55:43
totally cooked as a generation?" which was an interesting and he'll do fine is the thing. Um but it was an interesting thing for him to write me I thought. Yeah. But this is what you have is labor
00:55:54
and opportunity and equality and that is your son is is frighteningly bright. He's big. He's strong
00:56:00
and he's going to graduate from Michigan with a degree in computer science which mechanical engineering.
00:56:05
Okay. Even better. Yeah. Which basically means when you show up from Michigan with a degree in mechanical engineering, I don't care if
00:56:11
you're interviewing at Warner Brothers or Google. They just want you cuz the assumption is this kid is really curious
00:56:16
and really smart and really hardworking. There's no way of faking mechanical engineering in Michigan. There's no way of they're going to go,
00:56:22
"Oh, he's an epo baby." Classes are so hard. I recognize that name. But he's clearly one of these kids
00:56:28
who's who despite being born a Nepo baby is really hardworking and really smart. Let me tell you, I don't help him at
00:56:34
all. He's so brilliant. But I'm just saying, but that's his mentality. Like, you know what I mean? Like a lot of
00:56:39
younger people, even someone as qualified as Alex is is worried. They're worried about that. But this is this is the reality.
00:56:46
A kid like that garners a disproportionate amount of wealth at a young age. There's more opportunity for
00:56:52
Alex is in the 1%. It has never there's never been a better time to be a 20 or 22year-old in the top 1%. There's never been a worse time to be in the bottom 90. Yeah. And that is the kids who come out
00:57:05
of a a decent school but not a great school but had a lot of student debt and are good but not great. A lot of us I
00:57:11
would have been [ __ ] I was not especially impressive at 22 and I got a job at Morgan Stanley
00:57:17
because I lied about my grades and talk my way and I'm a good interviewer and I rode crew and the guy who ran the fixed income department road crew. But in this
00:57:24
age, if you don't have your [ __ ] together, if you're not one of the top 1%, and the problem is we all delude
00:57:30
ourselves into thinking our kids are in the top 1%. And I can prove to every parent 90% of our ch 99% of our children
00:57:36
are not in the top 1%. So the inequality it I I say this in my class, it's never
00:57:43
been easier to be a billionaire. I say, look around. My classes are 160 kids. Two or three of you are going to be
00:57:48
billionaires through tech, alternative investments. I said, "But unfortunately, there's probably about 10 or 15 of you
00:57:53
who are going to be living with your parents at 30." Yeah. Whereas when I graduated is one of those billionaires cuz then I will live live
00:58:00
high on the holiday. I go to Korea a lot for treatments. He promised me he'd buy me a house with a roller coaster if he got really rich,
00:58:05
which I'm very excited for. Anyway, we have to move on because guess what? I'm going to be interviewing Scott Galloway really soon. That's right. On um talk
00:58:13
about his book. Uh anyway, we want to hear from you. Send us your questions about business, tech, or whatever's on your mind. Go to nymag.com/pivot to
00:58:19
submit a question for the show or call 85551 pivot. Elsewhere in the Karen Scott universe, gosh, you interviewed
00:58:25
someone you made fun of on 60 Minutes uh recently. This week on Profy Market, Scott spoke with Andrew Ross Sorcin
00:58:31
about his new book 1929 inside the greatest crash. Making fun of Leslie Stall, not all right. Wall Street history and how
00:58:37
it shattered a nation. Let's listen to a clip from our favorite Canadian. The truth is that,
00:58:45
you know, over time the market goes up. You know, a lot of people, by the way, since this book came out, they said,
00:58:50
"Oh, Andrew, you know, you're calling for a crash. It's all going to end terribly. What are you saying?" And the truth is that you can have all the
00:58:58
Cassandra in the room um you know, saying the sky is going to fall. But over time, things have gone up. And I do
00:59:05
think that's worth noting because being a professional optimist has been a better business than being a
00:59:11
professional skeptic. Um, again over time covering his ass on that one. He's actually he's actually pretty um bold though. He's not afraid to make
00:59:21
statements about CNBC and Yeah. No, I love First, I want Andrew to run for mayor of New York. And two, I want I want Andrew
00:59:28
to be the trustee for my estate. I think he's just such an honorable, smart, nice man. He's It's a great book. I have it. is
00:59:34
really terrific. Actually, I I love those historical books and he's a We love Andrew. We love you, Andrew.
00:59:39
Seven years. We love you. We want you to We want you to father all our children. Well, to imagine he does all this while
00:59:45
maintaining a status as an undercover undercover operative for the Canadian Intelligence Correct unit. I mean, it's
00:59:50
really impressive he's able to balance all that. Yep. And he does all the pickup and drop off at uh preschool. Anyway, uh speaking
00:59:57
of Canada, we're going on tour. We are sold out in Toronto, Boston, uh, and, uh, and San Francisco. Uh, but we still have just a, I think, few tickets in DC. Not very many, some in New York. It's a
01:00:10
big place. And LA, uh, and Chicago. Please visit pivotour.com for tickets, especially you Chicago. It's a very big venue. Okay, that's the show. Thanks for listening to Pivot. And be sure to like and subscribe to our YouTube channel.
01:00:22
We'll be back next week. Scott, read us out. Today's show is produced by Larara Neon, Zoe Marcus, Taylor Griffin, and Kate
01:00:28
Gallagher. Ernie Unatad engineered this episode. Manala Moreno edited the video. Thanks also to Drew Bros, Miss and Dan
01:00:34
Shalon. Nishak Curo as Fox Vox Media's executive producer podcast. Make sure to follow Pivot on your favorite podcast
01:00:39
platform. Thanks for listening to Pivot from New York Magazine and Vox Media. You can subscribe to the magazine at nymag.com/pod.
01:00:45
We'll be back later this week for another breakdown of all things tech and business. Cara, I'll see you in a few hours.