00:00:00
Well, I'm sorry. Pope the Pope shouldn't talk about matters of theology. Isn't
00:00:04
that exactly who should be discussing it? >> I think he's torpedoing his 2028 chances
00:00:09
by picking a fight. >> Hi everyone, this is Pivot from New York Magazine and the Vox Media Podcast
00:00:19
Network. I'm Cara Swisser. >> And I'm Scott Galloway. >> How's it going Scott?
00:00:23
>> Just so well. Cara, >> let's do a rundown of the latest with Iran. President Trump says the war is
00:00:28
very close to over again. As we tape this, Iranian officials and Pakistan's military chief are set to meet in Thran
00:00:34
to discuss messages exchanged by Iran and the US. Meanwhile, Iran's military
00:00:38
has threatened shipping in the Red Sea if the US continues its blockade of Iranian ports.
00:00:44
>> Let me just piss off everybody. I think that the US threatening to fully block
00:00:48
the state of Hormones is the right move right now. many people do >> because uh freedom of navigation for the
00:00:54
last 150 years has been a key component of the global economy. It's a generally
00:00:58
accepted principle that the strait of Malika, the straits of Singapore, if Indonesia, Malaysia, and Singapore
00:01:03
decide one day to exert their geopolitical power and get tens of billions of dollars that they could
00:01:09
block the straight. Egypt could block uh the Suez Canal. And so if there isn't a
00:01:14
multilateral force that keeps this thing open, it just sets a terrible precedent.
00:01:19
Now, how we got here, I think a lot of people have very valid arguments around, well, we broke and now we're asking the
00:01:24
world to fix it. But I think it's actually a good strategy to say, okay, if you want the straits blocked, we're
00:01:29
going to make them block for everyone, including all entry into Iranian ports, which I think is the right move. Um,
00:01:36
what is really unusual about all of this, and I know we're going to get to this, is that the markets are up.
00:01:44
>> Yeah. um which is just it it fully seems like the markets have totally >> dislocated the the S&P is up 2.8% 8% at
00:01:52
the time of this taping just they are going up because they feel that there'll
00:01:55
be some some opening of the hormuz correct I mean or as Scott Bessing call it the straight of vermouth but go ahead
00:02:03
>> there's a few things happening one I' I've said this for a while I think
00:02:08
the NASDAQ and the Dow are the two most damaging metrics in the world because they give people a false sense of how of
00:02:14
the prosperity and well-being of the world and the reality is America is energy independent and so there's
00:02:20
actually some stocks that are up 20 to 40% in the oil sector. So it's not a defense risk to us. There is the markets
00:02:26
seem to be saying that the war will at some point be resolved sooner rather than later and that the oil flow through
00:02:32
hormos will begin again. You also have this unusual situation where in the last three major conflicts the US was
00:02:40
involved in or three exogenous shocks, the Gulf War, the Iraq war and COVID, what ended up happening was the markets
00:02:48
were way down and initially in March at the outset of the war, the markets declined 10%. But in each instance,
00:02:55
there's been a ripback and the following year the stocks are up. So people have
00:02:58
been buying the dip and basically what's happened now is people buy the dip sooner and the markets recover based on
00:03:04
a historical pattern of the market surging. >> There's still a mess there mess created
00:03:09
by Trump that was unnecessary, right? This the way he's doing the way he's
00:03:12
conducted. >> Well, that that's a political statement and I I you can agree or not agree. I'm
00:03:17
just talking about what the markets the markets have totally disassociated. And I think, you know, Stephanie Rule
00:03:22
actually had a really good take on this uh this week where she was talking about
00:03:26
why they're like this and they just feel they're just trading, that's what she
00:03:30
said, the ups and downs. They don't care about anything else. They just have
00:03:33
watched the historical um behavior around this. >> But also, look at who look who this is
00:03:38
hurting. Gas is up. Gas prices are, you know, Brent crude is up. You know, the European benchmark's up 32%. The price
00:03:48
of gasoline in America is up 36%. Brent oil futures are up 31%. But let's be honest, who does this hurt?
00:03:55
It hurts the lower half of oil prices does don't really impact me, Cara. And
00:04:01
and the reality is 10% of the top decile of American citizens now are now responsible for 50% of consumer
00:04:07
spending. >> They own 90% of the stocks. Do they care that gas is at six bucks? I mean, it's
00:04:12
an interesting media headline, but the reality is the stock market is now a proxy for companies that are mostly
00:04:18
invested in technology and some oil companies. You could argue some consumer companies will get hurt because
00:04:24
consumers will stop will spend less, but wealthy people. I'm going to one of the
00:04:30
thing I interviewed Jose Andre this week um at the um sem and he was talking about fertilizer prices and how people
00:04:38
you know people across the world eat hand-to-mouth and and he was noting that he said you and I you know it'll be
00:04:44
irritating to pay four5 $6 at the gas station um and it will it will hurt us but not in the way it hurts people
00:04:52
around the world and and also uh fertilizer prices um for for farmers in the Midwest and added to the tariffs
00:05:00
with Canada. The United States primarily imports fertilizer from Canada and I think Russia. Anyway, we we have an
00:05:06
issue with everybody else and so the stock market doesn't reflect people's
00:05:10
lived experiences. Right. That's that's exactly right. >> So, one of the things that um that House
00:05:16
Democrats are doing and you told them to act and I don't know if you think this
00:05:19
is a thing to do, but they just filed six articles of impeachment against defense secretary Pete Hegest. I think
00:05:24
they're getting ready as Rahm Emanuel has start started to make some moves high crimes and misdemeanors related to
00:05:30
Iran. And by the way, Heg's death, I must note, he read a fake Bible quote from Pulp Fiction during a prayer
00:05:35
service at the Pentagon on Wednesday. >> It's beyond political. It's now economic
00:05:39
for most people. You know, it doesn't get missed in all this, but it has a real impact, including this beef with
00:05:45
the Pope. Um, let's listen to a clip. Now, JD Vance has entered the conversation. But I think that it's
00:05:50
important in the same way that it's important for the vice president of the United States to be careful when I talk
00:05:55
about matters of public policy. I think it's very very important for the pope to
00:05:59
be careful when he talks about matters of theology. >> Yeah. Peace is a really big thing in
00:06:05
Catholicism. >> Well, I'm sorry. Pope the Pope shouldn't talk about matters of theology. Be
00:06:09
careful. >> Isn't that exactly who he should be? >> He should be careful. Even though he's a
00:06:13
very well- reggarded theologian, but JD Vance has some words for him. He's I
00:06:18
think he's torpedoing his 2028 chances by picking a fight. I just don't understand.
00:06:23
>> He is trading off. He's decided still that he needs to have such to be such an
00:06:29
acolyte. This is a politically stupid move for him >> because evangelicals are actually swing
00:06:35
voters. They were sort of a toss up with Biden and then they they went hard for Trump. If he doesn't get evangelicals,
00:06:42
he's not going to be the nominee. and he's clearly decided that it makes more
00:06:46
sense. I mean, quite I don't get this at all because if he were to come out and
00:06:50
say those comments, while I respect what Trump said, I feel like the Pope's comments were illtimed. I still have an
00:06:57
issue and I will not be critical. Or if he came out slightly against Trump, Trump might be furious at him. Trump's
00:07:03
not going to dump his VP at this point. And JD Vance needs evangelicals. I mean,
00:07:08
this was just a really stupid thing. And also uh uh just because I think it's
00:07:15
important to be as offensive as possible and convince people that I am not in fact running for president. You know how
00:07:21
>> a little boy saved a priest's life? >> Oh, no, no, no. We're not doing that.
00:07:24
We're not doing We're not >> Okay, never mind. I'm sorry. I won't do
00:07:27
it. I respect you. I got a picture behind me. Never mind. Let's move on. >> Um
00:07:30
>> he found a lump on his scrotum. He found a lump on his scrotum. Cop pulls over
00:07:35
two priests and says, "We're looking for two child molesters." and the priests
00:07:38
look at each other and then look to the cop and say, "We'll do it."
00:07:41
>> Oh my god. Okay, we're not insulting the Catholic Church right now because Trump
00:07:45
is doing so. You know, I know it's a joke about Pete Haggsth quoting from Pulp Fiction. He probably did an AI
00:07:50
search and thought it was that, right? That's my guess. That's that's probably
00:07:54
what happened to one of his dumb minions added it in. It's a fake Bible. These
00:07:58
people are so performatively religious is the my issue. Like they don't even
00:08:03
they don't even read the Bible. they just quote from pulp fiction because they don't know the difference. And if
00:08:08
you were actually someone who's really uh religious, you do know the difference. And with the vice president,
00:08:15
he just literally let me just take one more point. Uh the pope is an American citizen. He should be able to say when
00:08:21
he wants, by the way, he I I don't he remains an I assume he remains an American citizen. Um just
00:08:28
>> like being a pope. Um but he doesn't lose those first amendment rights.
00:08:32
>> Very impressive guy. >> But he's talking about peace. He's
00:08:34
talking about tyrants. He's talking about everything Jesus talked about. >> He's very
00:08:38
>> everything. >> Yeah. >> And solidifying his >> but more importantly, what do what do
00:08:43
you get when 500 Jewish mothers convert to Catholicism? Tara, >> you get critical mass.
00:08:51
>> Get it? Critical mass. I think that's pretty good. >> We're going to move on. This is really
00:08:57
disastrous. This fight with the Pope. The Pope is going to win, kids. >> Oh yeah. No, don't go up against El
00:09:02
Papa. Especially this papa. He's very good. >> Oh man, I even want to go in the church.
00:09:07
That's how good papa it is. I'm like, I'm going back. >> You're going to go to one of those crazy
00:09:11
unarian churches with some lady with blue hair. >> Yeah. No, I don't like unarian cuz I
00:09:16
>> baptizing bapti baptizing support or rescue dogs. You'll let me. >> No, I won't. I don't like those. I
00:09:23
actually Megan >> or go to Glide next time in San Francisco. >> I love Glide. It's a wonderful church.
00:09:29
It's a wonderful church. I don't like Unarian churches. My my ex-wife took me
00:09:33
to when we were married and I was like, do they stand for anything? Like for some reason the Catholic in me got going
00:09:38
and I was like >> they're too politically correct. >> They were like I was like it was like
00:09:42
everybody everything. They believed everything and I was and I listen I have a lot of respect for all all religions.
00:09:48
But I got I I had to leave. I was really >> there there's your land acknowledgement.
00:09:52
I don't I believe some religions are worse than others. To say that I just want to I just I got interrupted by my
00:10:00
>> um uh poorly poorly timed jokes. I just want to go back to the notion of trying
00:10:05
to do an impeachment or begin impeachment proceedings of Hexath. I think that's stupid. I don't think you I
00:10:12
think if we've learned or one thing we should have learned as Democrats is that uh unless you have the votes
00:10:18
lined up, you don't do it. It comes across signal what they're going to do. Isn't
00:10:24
that kind of signaling what they're going to do? >> No, this is in my view, this is what
00:10:27
they do. an an impeachment nostalgia tour the Democrats don't need. Again, it
00:10:32
at this point it wouldn't work. I'm all for impeaching the president at this
00:10:36
point and the Secretary of Defense. You don't do it until you know the votes are
00:10:40
locked. You announce it and then start the vote the next day. Otherwise, it's
00:10:43
just performative and pisses off the other side and is a waste of time. This is what you do. You announce legitimate
00:10:49
legal action and coordination with a state AG to go after certain individuals who have committed actual crimes and
00:10:56
there's a lot of them. in this administration. This is performative. It's political and we're gonna again
00:11:02
look stupid. >> All right, back to All right. The Demat still suck according to you. Sorry. Um,
00:11:06
but what what do you think about the POW situation? Because this seems like another self own here. Tillis is not I
00:11:12
trust me, Tillis is not backing down. Like just FYI. Anyway, um I'm going to
00:11:17
move on because the chaos follows Trump wherever he goes. He's back to his Jerome Powell fight. He's like an old
00:11:22
man who forgot he was fighting with someone and then remembered. He said if he doesn't uh step down next month, he's
00:11:28
going to fire him. Like even though he has more time on the board and also says the DOJ probe of Po Powell and the Fed
00:11:34
should continue. Powell's Fed chair term officially ends on May 15th. His term as
00:11:38
Fed governor is up in 2028. Usually they leave when they when they finish their chair, but he doesn't have to. And he
00:11:45
plans to stay on as acting chair until his successor Kevin Walsh is confirmed. Pal says that's what the law calls for.
00:11:52
Wash's confirmation is scheduled for next week, but Senator Tom Tillis, who I
00:11:56
interviewed, as said, confirmed again. He won't confirm him until the DOJ probe
00:12:00
is resolved. All this from the prosecutors from the US Attorney Janine Piro's office showed up at the fed this
00:12:06
week trying to get a tour of the building's renovations got turned away. She's trying hard to become attorney
00:12:11
general, FYI. Um, he can't. If he fires Trump Fowl, he's in big trouble. He's
00:12:18
going to taco this one, right? It's three people in a room with with with Claude and Chachi PT and every time the
00:12:27
temperature and association with Epstein gets a bunch between the link between Trump and Epstein and its presence in
00:12:32
the media gets above a certain temperature they say throw something out and distract everybody.
00:12:38
>> And this is just another one because I don't even think it legally has the
00:12:42
right to remove Pal from the board of governors. So his term doesn't end till January 2028.
00:12:51
>> So this is just again I believe he knows and his people have said I mean there's
00:12:57
two things are going on. Either grandpa just says [ __ ] as he's as he's thinking
00:13:00
it and maybe that's true or if you give him more credit than that it's another
00:13:04
attempt to distract from from Ebstein. I don't want to say I feel bad for Kevin
00:13:09
Worsh, but his entire hearing is going to be about Jerome Powell, not about Kevin Walsh.
00:13:16
>> And what I've said before is that as long as Powell is on the board of
00:13:20
governors, he's the de facto chair because anything he says, 11 of the 12 governors are going to not,
00:13:27
>> which is why Trump wants him gone, which is why Trump wants him removed.
00:13:30
>> That's exactly right. But he does not have the power to do this. and you are
00:13:34
going to have several Republican senators find their testicles and come out in favor of Chairman Pal remaining
00:13:41
on the board of governors. It's it but I think Trump I think Trump knows that and
00:13:47
just today said I need something to keep Epstein out of the news. I'll go after
00:13:51
Pow or Pope fiction. Yeah. >> Yeah. My favorite is my favorite is they're going to start talk about
00:13:57
talking about Epstein to distract from Iran. >> They're not going to fire Powell.
00:14:02
They're not. Okay, Scott, let's go on a quick break and when we come back, Amazon makes a
00:14:07
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See Mint Mobile for details. Amazon is acquiring a satellite operator, Global Star, in a deal worth
00:16:36
around 11.5 billion as it tries to catch up to SpaceX Starlink. Under the agreement, Amazon gets global stars
00:16:42
existing satellites and infrastructure which will operate alongside Amazon's
00:16:45
own uh network now called LEO as after the Pope I guess. Uh Amazon says the deal will enable it to build directto
00:16:53
device satellite system with a rollout expected in 2028. FCC chairman Brandon Carr says his agency is very open-minded
00:17:00
to the deal and the FCC is taking all gas no brakes approach to expanding the US space economy. he kind of has to talk
00:17:07
about this because obviously Amazon isn't going away um with and they're
00:17:11
trying to solidify this network for themselves to be the at least the number two player here.
00:17:17
>> My big stock pick for 2025 was Alphabet. We got that one right. My big tech stock
00:17:24
pick for 26 is Amazon. This is what I think Amazon is going to do. They are going to build a viable competitor to
00:17:32
Starlink using Kyper as a platform. And this is another >> it's called LEO
00:17:37
>> step in that they get I'm sorry project LEO they bought basically they bought 24
00:17:42
satellites here >> and it's never been profit profitable but Amazon close up 3% and this is what
00:17:49
I think Amazon strategy is Amazon's going to launch a phone and then they're
00:17:53
going to offer Amazon Prime Plus which will offer you a phone and lightning fast connectivity into your home.
00:18:01
They're going after AT&T, Verizon, and Comcast and basically going to offer you
00:18:06
connectivity with Amazon Prime, and they need the satellites to do this. So, why
00:18:12
would they buy a nonprofitable satellite company? Again, the above 24 satellites.
00:18:16
They get spectrum, they get radio waves, the wireless signals, uh, including Wi-Fi, Travalon. The government owns
00:18:23
these and issues specific licenses for them, but spectrum is auctioned off by the FCC and extremely expensive. So,
00:18:28
they get that. They could do for B toC again Amazon price they could sell Wi-Fi to prime subscribers B2B they could sell
00:18:37
private wireless networks to serve its warehouses delivery hubs robots drones robots and drones need this connectivity
00:18:44
to communicate wirelessly constantly and it's much easier if it's costefficient
00:18:48
if Amazon has its own network >> yes this is essentially a strong number two
00:18:54
>> this is >> presumably >> this is essentially what Amazon is it's
00:18:58
the strongest infrastructure company in the world. It's an extension of their
00:19:01
investment in their logistics network. And right now, Project LEO has 240 operational satellites. It plans to ramp
00:19:09
up its network by deploying 3,200 in Earth's low orbit by 2029. Starlink has
00:19:16
over 10,000. This is definitely catchup, but Amazon has 115 million homes to offer this service consumers, right? So,
00:19:25
you have to go out and buy Starlink and people do love it. I have to say, you know, oddly enough, Jose Andre, who has
00:19:31
had beef has a huge beef with with Musk over uh US aid saying he's killing essentially saying he's killing people.
00:19:38
>> Um he said we used to critical to our world central kitchen operations. And I
00:19:43
think he would like an alternative, but he definitely said it's really a shame.
00:19:47
I wish that Elon was around and not this other one. Um which is, you know, hugely
00:19:52
damaging to their efforts across the world feeding people. Um but between that fertilizer and that like the cuts
00:19:59
at USAD they're facing you know a huge uphill battle against hunger across the
00:20:03
world. But one of the things that's happening here is you get an all this is
00:20:07
what happened with Tesla. This is what happened. There's going to be number twos. Now will it have an impact on the
00:20:13
SpaceX IPO? I doubt it. I think it's going to be like it's going to run.
00:20:17
Oddly enough, interestingly enough Google is a big owner of it um of the SpaceX IPO. they're going to make like
00:20:24
many commas of money um from this deal. So that should that would that that'll
00:20:29
be an interesting thing because many years ago Yahoo owned a big piece of Google. I don't know if you remember in
00:20:34
the beginning and that's what saved them for a while like having that investment
00:20:39
in in Google that they made um and now in this case Google's going to make a
00:20:44
lot of money from these SpaceX. But I don't think the SpaceX IPO will be damaged in any way. Correct. from your
00:20:49
perspective? >> No, it's it's arguably one of the strongest brands in the world right now
00:20:53
and people are excited about it. It'll go out wildly overpriced. I think it'll
00:20:58
get a slight bump. It'll be the biggest IPO of of um 26. The best IPO of 26 will
00:21:05
be Anthropic, which will get out ahead of Open AI because it has more momentum. But it's going to be again
00:21:13
if you look at SpaceX um what I think 18 billion in revenue, 6 billion in profits. So when um it's
00:21:23
going to it's going out at 100 times revenue, it's growing 24% a year. When
00:21:28
Google went public, it was growing 240% a year and trading at 10 times revenues.
00:21:33
So SpaceX, incredible company, the most overvalued IPO in history. Uh, the answer is yes.
00:21:40
>> And I think it's great just insane. There's another there's more satellite
00:21:43
efforts like this. There has to be at least two or three. I mean, there's not
00:21:47
going to be more than that by the way because the costs are so huge, but it's
00:21:50
good for having run for their money. Speaking of OpenAI and Anthropic, OpenAI is distancing itself from Microsoft and
00:21:56
coing up to Amazon, which is interesting. In a memo sent to staff, OpenAI's revenue chief, Denise Dresser
00:22:02
said that Microsoft partnership has limited the company's ability to meet enterprises where they are. No, no [ __ ]
00:22:08
On the other hand, Dresser said the company's Amazon deal has generated frankly staggering demand. Dresser also
00:22:14
used the memo to go after anthropic, accusing the rival of building its strategy on quote fear restriction and
00:22:20
the idea that a small group of elites should control AI, which is interesting to say. Obviously, they're throwing
00:22:25
they're trying to hurt Anthropic in the race to an IPO. They're throwing
00:22:29
Microsoft under the bus. Speaking of Anthropic news, the company has recently received multiple offers from VCs to
00:22:34
invest at valuations as high as $800 billion. And Anthropic has briefed the Trump administration about its new
00:22:41
Mythos model, which is not being released to the public do, as we talked about last week, due to its alleged
00:22:45
cyber security capabilities. Um, interestingly, an an Bezos owned Washington Post said that efforts by the
00:22:53
Pentagon to thwart anthropic are stupid, which was interesting. This week, they're fighting it out in court. I
00:22:59
suspect the Trump administration is going to start dropping that soon enough. >> Anthropic has more momentum than any
00:23:04
company in the world right now. It's gone I mean it's gone at the end of 2025
00:23:10
which wasn't that long ago its ARR was 9 billion. It's now 30 billion. It's more
00:23:15
than tripled its annual recurring revenue in 4 months. And by the way Open AI is 25 billion. So the little engine
00:23:23
that was, you know, kind of an afterthought to open AI just 12, 18 months ago is now a bigger business than
00:23:30
Open AI. And this is the first time that Anthropic has led on revenue and it's
00:23:35
growing faster. It's and not only that, it's a better business because that
00:23:39
growth is almost exclusively enterprisedriven, which is a better business. >> So what is OpenAI doing here by
00:23:45
releasing they released the memo? Let's not pretend that this is what they were
00:23:49
doing. What what's the message? This has become Coke versus Pepsi. And >> yeah, I I think it feels desperate. I
00:23:55
don't I They're trying to >> They're trying to weaponize the government against them. They're trying
00:24:00
to [ __ ] post them. These guys hate each other. It's It's the Hatfields versus uh
00:24:05
the McCoys. And Anthropic has 1,000 customers paying over $1 million a year. That's up from just 500 in February. The
00:24:13
number of customers spending over a million dollars a year has >> So, they don't seem to care about the
00:24:17
Pentagon thing at all. You had thought they might, but it looks like they don't. Looks like they don't.
00:24:22
>> The the numbers here, let me give you some more data. 80% of Anthropics
00:24:25
revenues come from business clients who are quite frankly are just more reliable
00:24:29
and more and less margin sensitive than consumers. Uh versus 40% at OpenAI. 70% of every incremental dollar spent on AI
00:24:38
coming from the enterprise is going to anthropic. They raised 30 billion in their series G at a $380 billion
00:24:44
valuation, which is ridiculously low compared to the $850 billion valuation that OpenAI did, guaranteeing a 17%
00:24:54
return, which could crush previous investors if they don't if they have to go out lower than that. They they also
00:25:01
said I mean the both companies are exploring an IPO this year and Anthropic projects
00:25:08
uh positive free cash flow by 2027. Open AI is said they're going to break even in 2030. But the bottom line is
00:25:16
Dario Emodi is just showing himself to be a much more competency. >> Let me ask you a question. This focus on
00:25:23
>> consumer here's what I see. Open a definitely focused on consumer and being
00:25:27
like Kleenex or Google, right? That was what they were going for. The the one that everyone thinks of chat GPT is AI,
00:25:35
right, for everybody essentially, not Claude. Chat GPT is Kleenex, right? Or CL or Google or whatever the the
00:25:41
representative of everything. >> So they relied on the consumers then they have a really they start Sam Alman
00:25:48
starts to get a very bad consumer reputation. So he that like and up and up to and including people attacking his
00:25:56
home, right, which is heinous. They have relied on consumer relationships which are very easy to
00:26:03
break right suddenly you become the bad guy and I think that that's one of the
00:26:06
things but >> bear hugging Amazon and pushing away Microsoft what is that if you're in the
00:26:12
room what do you think the strategy is >> the honest truth is I don't know my
00:26:16
guess is there's some ego involved here and some dynamics behind the scenes that
00:26:19
I just don't understand but let me be clear it's not easy to build a consumer
00:26:24
brand it can be very powerful I'm not suggesting I'm biased because all my
00:26:28
businesses have always been B2B and the and the one business I did B TOC red envelope was just so much [ __ ] harder
00:26:35
that I found than doing building a B2B business. Now what I think the dynamic here is the following. The reason why
00:26:41
Anthropic is going to be worth more and get to the IPO starting line faster than
00:26:46
OpenAI as an enterprise dominant business as opposed to a consumer business of open AI. It's not
00:26:52
necessarily that one is much better than the other, but here's the difference in
00:26:55
terms of competitive dynamics. You can get as a consumer a really outstanding LLM and AI for free. If
00:27:04
you're a company, if you're Clorox looking for a $3 million enterprisewide
00:27:09
LLM uh AI offering, there's no free alternative. So in some the substitutes on the
00:27:18
consumer level are just much greater than the substitutes at an enterprise level which says to me whoever dominates
00:27:24
enterprise has a just a much better business. Also these with just with just a duopoly if one is perceived as better
00:27:33
which right now Anthropic is perceived as better in the enterprise enterprises are much less consumer sensitive because
00:27:40
if they're going to implement technical debt they don't care if it's 30% more
00:27:45
>> was it a mistake is it a mistake to then say we we didn't get in the enterprise
00:27:49
fast enough due to Microsoft which may in fact be the case and now we're going
00:27:53
to hug Amazon >> that makes no [ __ ] sense >> why do it piss why are they doing
00:27:57
Well, you're going to piss you're going to piss off one of the most important,
00:28:00
measured, thoughtful people in text. That just makes no sense. That's not >> when you were in trouble.
00:28:06
>> Yeah. And it shows it shows that you're not getting along with your you have
00:28:10
these fights behind the scenes. You don't you don't say that publicly that
00:28:14
you don't get into a war with Microsoft. >> But one of the things they have to do is
00:28:20
they have a problem with their image because they're the face of AI. They're
00:28:24
the face of AI, right? Well, Daario looks like a hero from a from a marketing point of view at the very
00:28:30
least. And so that's I think the real problem is Sam Alman represents AI which
00:28:35
everybody is hating on like young people all the polls everybody has a problem with it. And when the problem shows, you
00:28:42
look at someone like Sam Alman and not Dario. You know, Daria is not getting the kind of hatred that Alman is getting
00:28:49
now, which I think is a problem. But why hug Amazon too? >> Because Amazon is executing against
00:28:55
infrastructure like no one's business. And if you want to, I mean, arguably Amazon from an enterprise level is the
00:29:01
most discerning consumer in the world. And Amazon is the best infrastructure company in the world. I I so but I think
00:29:10
there's some ego here. I think someone got pissed off at someone. But you don't
00:29:14
you don't get into a public tiff with Microsoft. By the way, just in terms of
00:29:17
stocks, Microsoft as a multiple of free cash flow is cheaper than it's ever been. I think Microsoft's a really good
00:29:22
buy right now. But look, the Anthropic has so much momentum right now and OpenAI does not. Do you get this? Khi is
00:29:34
saying the odds of Sam Alman being replaced as CEO are up to 27%. I mean for the first time Sam Alman
00:29:41
being replaced by the end of the year is a real possibility because OpenAI public
00:29:47
tiffs with Microsoft who was supposed to be your partner in this throwing up totally [ __ ] the bed in the
00:29:53
enterprise market all this negative PR and press I mean and there's just no getting around it. Anthropic is worth
00:30:02
more than open AAI right now. And so I I think Sam I think they were smart to be
00:30:09
focused. They're going to do away with that ridiculous [ __ ] nonsense from IO. That that was the stupidest
00:30:14
acquisition of whatever it was. That's going to be a >> that's going to be a $6 billion rideoff.
00:30:19
>> They're smart to stay focused. But this is this is a tale of two cities and one
00:30:25
city is skyrocketing and that's anthropic and the other is burning up on re-entry and that's um that's open AI
00:30:34
it's but the posturing is important right so Alman is fighting with Musk on on on that case which is going to be
00:30:40
full is going to trial it looks like this case so that's going to bring unnecessary
00:30:46
>> no matter what Elon fights you know >> with a lot of swords so it doesn't he
00:30:51
he'll he'll and some blows even if he's and make them look bad. He will even if
00:30:56
he looks he doesn't care cuz he's like the villain. So it's fine if he makes
00:30:58
other people look like a villain. I mean from a from a public perspective. Um they're also um you know it's not just
00:31:05
Alman. It's like someone like Chris Leane who I find very aggressive right and this is a very aggressive group of
00:31:11
people that sounds like they're not getting along internally. You sort of feel rumbles of that. um you know the
00:31:17
mistakes of not embracing enterprise and going full scale into popularity. Now I
00:31:22
agree they shouldn't be fighting with Microsoft but they made their they made
00:31:26
the mistake and now they're blaming their partner for that right ability to meet enterprises where they are because
00:31:33
they're actually >> they look like Microsoft competitors in that in that space. So anyway,
00:31:40
>> but what's to be gained what's to be gained by [ __ ] posting Microsoft in
00:31:45
public? What do they get? >> Just to say we we're serious about the we're going to really compete in the
00:31:50
enterprise this now we're serious. I don't know. I don't know. I just I don't
00:31:54
understand this memo whatsoever. >> But what enterprise is going to hire open AI because they've been critical of
00:31:59
Microsoft? I I don't I I absolutely don't get it. This these people have
00:32:04
egos. Sachi Nadella doesn't need doesn't need Sam. I mean Microsoft could write
00:32:09
off its investment in open AI. It quite frankly the market has already done that. The market has taken Microsoft's
00:32:15
stock down I don't know 20 or 25% in the last six months. the the trouble in
00:32:20
Mudville has already been perceived by the market with respect to Microsoft's
00:32:24
playing in traffic with open AI and that their investment in open AI may not end
00:32:28
up being you know the the the the kicker in the afterburner every got in >> and a guy like
00:32:35
>> go ahead Amazon got in at better rates essentially but go ahead >> and a guy like Sachi Nadella doesn't
00:32:39
scare easily I I don't I don't I absolutely don't understand who approved
00:32:45
this public spat on the and it says to me that open AI I does not have a board that that would say, "Oh, yeah, that's a
00:32:52
good idea. Let's get in a war with Microsoft." There's ego here. Someone
00:32:56
got pissed off at something. >> Anthrop going after anthropic as being fear restriction idea this small is just
00:33:01
sort of so backward looking just to to when you start attacking the number two. There's something going on. Especially I
00:33:08
think they were trying to get reporters interested in this run rate and you know
00:33:12
inflation of revenues which by the way no one really cares about with these companies at this point. They want to
00:33:18
know who the leader is going to be anyway. Um I mean they should care but they don't.
00:33:23
>> It's just a dump. >> There's a general crucible rule fundamental truth in branding and
00:33:30
marketing is that when you're the market leader or you want to be perceived as
00:33:34
the market leader which I think open AI would say we are the leader and we want to be perceived as the market leader you
00:33:42
never reference the competition. You don't you just never Visa was a client of mine back in my brand strategy
00:33:50
days at Profit and I said why wouldn't you talk about this versus Mastercard
00:33:54
and he goes we're the market leader we never reference the competition. When
00:33:57
you reference the competition you're immediately saying they're a competitor
00:34:00
and when you're the market leader what you want to say is we have no Coke never
00:34:04
re Coke never referenced Pepsi. Coke never did a taste test. Like we don't even as far as we're concerned Pepsi
00:34:10
doesn't exist. We're [ __ ] Coca-Cola. I I I used to do when they were talking
00:34:14
about competitors, I'm like who? I'd be do things like like I'm sorry I didn't
00:34:18
see it. Like I would on purpose. >> Yeah. I don't the best I don't do that
00:34:26
Scott. >> I'll try and draw this. Scott, >> who's that? Who's that? What? I think
00:34:30
someone said he has a picture of me >> behind him on his podcast. The the personal learning here is the following
00:34:37
or what I finally come to peace with. When people [ __ ] post you or criticize you online,
00:34:41
>> the best revenge, hands down, >> indifference, just indifference. You
00:34:47
gotten good on that. >> Don't mention mad at certain people attacking you. Get all
00:34:51
>> Well, I wasn't used to it. I used to be this cute professor that everyone said
00:34:55
nice things about. And then when I got big because of you, >> people started actually looking at my
00:34:59
[ __ ] and saying, "This makes no sense." >> Uh, and I would get upset.
00:35:03
>> Anyway, I'm fine now. >> Then I discovered edibles. Anyway, you've gotten much better about that, I
00:35:08
have to say. Getting off of Twitter, which you did first, I will acknowledge. I'm sorry for making that mistake last
00:35:13
week. Anyway, um, another interesting story. We're going to go on a quick break. When we come back, we'll talk
00:35:17
about a potential United American Airlines merger. Seems unlikely, but here we go. Support for this show comes
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and confidence. Harvey, AI tailored for law. Learn more at harvey.ai. Scott, we're back with more headlines.
00:37:35
The CEO of United Airlines reportedly pitched a merger with American Airlines directly to Donald Trump. Of course, the
00:37:40
two companies combined would account for about 40% of the US domestic flying capacity. Industry experts and lawmakers
00:37:46
already pushing back, flagging major antirust concerns. I mean, even I know that as one analyst puts it, the Justice
00:37:51
Department doesn't object to that. They What would they object to? Trump is staying quiet for now with the press
00:37:56
secretary Carolyn Levid saying he has no opinion on a potential merger. I mean, I
00:38:00
don't mind uh this guy trying it, but why not? It's the last days of the
00:38:06
Nero's empire here, so why not? But this seems like something that would be dead
00:38:10
on arrival. I just don't I don't see it. >> Yeah. But you just you summarized it
00:38:15
perfectly and that is the last days of NARO and that is you're going to see in
00:38:18
the next two years you're going to see so many mergers um proposed because everyone's going to go there's no
00:38:25
[ __ ] way an FTC or a DOJ that is not in a deep coma would allow this. So if we're, you know, if we're what are the,
00:38:34
you know, two most dominant play if you're just going to see mergers like crazy because they're going to go this
00:38:40
is our last chance because this absolutely makes no sense uh from a concentration of monopoly standpoint.
00:38:47
This should not be allowed to happen. It would create the largest airline on Earth. 30 to 40% of US domestic capacity
00:38:54
and air I don't know if anyone's noticed airline tickets are >> skyrocketing. I have I just bought some.
00:38:59
Um, I was looking at a one-way from Miami to London business class and it was 11.
00:39:05
>> I know. It's crazy. They're crazy. >> Um, Kirby's argument to the
00:39:09
administration, a combined airline would be a stronger competitor internationally. Okay. Yeah. He noted
00:39:14
twothirds of long haul seats from two from US on foreign carriers, but 60% of passengers are American, framing it as a
00:39:21
trade deficit issue. And also American, I love airlines. I love aviation. Uh Delta does the best job domestically.
00:39:30
JetBlu's Mint is the best product. But American has been America is is has the best has the worst product.
00:39:37
They're the weakest of the big three. 111 million in net income last year on
00:39:41
54 billion in sales. Basically break even. It carries 25 billion in long-term debt, more than its rivals. On the other
00:39:47
hand, United, which is a better run company, did 3.4 billion on 59 billion. And American Airlines stock jumped
00:39:54
nearly 10% on the news. >> What does that say? But the antitrust, >> it could happen. This can't happen.
00:40:01
>> No way. >> Well, the market thinks it might because again, see above the guy, it's just
00:40:06
[ __ ] ridiculous that CEOs go kiss the ass of the president to try and get a merger through. He should have nothing
00:40:11
to do with this. But the the antitrust problems here are striking. There are 289 routes where the two carriers
00:40:18
overlap and combining them would leave only one or two airlines serving that route. See above increase in prices
00:40:25
hubs which overlap some of the routes that overlap are Chicago, Los Angeles, New York, New York, Phoenix, Charlotte
00:40:32
could require devesting entire hub operations in some cities >> and the DOJ previously blocked the
00:40:38
JetBlue Spirit deal >> which was a fraction of their size. So, this is exactly the kind of deal that
00:40:45
shouldn't even be considered if there was a DOJ or an FDC that was independent
00:40:51
and looked at consumer prices. And these consumer mergers and the lack of regulation does two things. It transfers
00:40:58
capital from labor and from consumers to shareholders. Full stop. And this it it's been a one-way flow of capital and
00:41:07
power for the last 30 years. And the DOJ and FTC have almost no reviews anymore.
00:41:14
I mean, it's like if you want to save money, get rid of the DOJ and the FTC.
00:41:17
What the [ __ ] are they doing now? >> Well, you know, it's interesting because
00:41:19
on Monday there you're seeing the significant push back to Paramount now. A lot of Hollywood is now like got the
00:41:25
pitchforks out essentially. I don't know if they can do anything about it at this
00:41:28
point, but you you see them like really organizing the the C at SICOM, all these
00:41:34
places. There's all this push back. And again, um David Ellison wouldn't show up
00:41:38
for a hearing uh in in Congress about this just uh for personal reasons, but um but there's just a lot of push back
00:41:47
there. And you sort of see it beginning to coalesce these ideas of no, I don't
00:41:52
think so, which is interesting. You'll see if this happens. Like I I I feel like people are are quite in the mood to
00:41:59
stop these things now. And that's going to be they're going to overreach on the
00:42:03
other side probably. Um, but it feels like this is like I can't even believe
00:42:07
this guy did this. Like I just like, well, okay. >> By the way, I I feel bad saying I need
00:42:13
to correct the record. The DOJ and the FTC do serve a purpose. They did they did decide that Live Nation was a
00:42:18
monopoly, which was the right which was the right decision. >> So, we'll see. We'll see where it's
00:42:23
going. There's a lot of push back on all these things, but you're right. They're
00:42:26
going to keep trying to do so um as things come forward and then we'll get to a normal level again. Um hopefully.
00:42:32
Um, one thing that's interesting, about 5 million kids have signed up for Trump
00:42:35
accounts. Um, a 1.2 million eligible for $1,000 Treasury seed deposits. The accounts were created through Trump's
00:42:42
big beautiful bill and are set to officially launch July 4th. Bank of New York Melon will manage the accounts and
00:42:48
Robin Hood will build a Trump accounts app. Um, what do you think about Robin Hood known for getting people into risky
00:42:55
trades involved in this? Obviously another suckup to Trump in some fashion, but um I have several friends who are
00:43:02
just doing it. It's like thousand free dollars like why not? Like this why not?
00:43:07
It seems like let's take the money and and use it to save for college or whatever you want to save for for kids.
00:43:14
Any thoughts on this? >> I love this concept. I remember meeting with a guy named Alex von Fenberg a
00:43:20
couple years ago and he was pitching me on the idea of baby bonds and he was very passionate about it and he's been
00:43:25
very involved in it. I I love the concept of at the very outset giving you know for every infant born giving them
00:43:32
some money and letting compound you know the most powerful force in the universe.
00:43:36
I would have gone much deeper than this for $40 billion a year you could give $7,000 to every baby and then I would
00:43:42
totally infantilize them and not let them touch it till they're 65. You give
00:43:46
you spend $40 billion a year and then in 20 or 30 years you announce in another 20 or 30 years we're no longer going to
00:43:52
need social security because everyone's going to have a million bucks at 65.
00:43:55
Interest rates dive and it pays for itself. >> But our Congress doesn't want to think
00:43:59
faster than their >> [ __ ] 2in dick. >> Is there danger here of riskiness for
00:44:04
people's like I mean this is free money. That's what I can you know someone
00:44:09
sheepist who said oh I took a Trump account. I'm like are you kidding? Grab it. Like absolutely take a truck account
00:44:14
if you're eligible. So, just to just to give you a sense of compound interest,
00:44:18
you know, my kid's going to college next year. When he was born in 200 um when was my kid born? 200 2007.
00:44:28
I put $10,000 and I think it's called a 529 New York account. >> And I'm like, I'm worried about college.
00:44:36
I don't I was a clinical professor making 160 grand a year living in faculty housing. And so, I thought,
00:44:41
okay, I'll scrape together 10 grand. And I didn't do it again. I was stupid. I
00:44:46
didn't do it again. I just looked it up online because I'm like, "Oh, what about
00:44:48
that 529 I did?" Now, granted, the markets have ripped. Do you know what that $10,000 is worth right now?
00:44:54
>> Couple hundred,000. >> No, 85. But still, in 18 years, it went more. I did them for both. I paid for
00:45:02
all of college with Louis and Alex. And people have controversies around 521s. You could have done better in the
00:45:06
market, but I just put it away and forgot about it. And I kept I added the maximum amount to it at the time.
00:45:12
>> Yeah. Yeah, but it's tax. I just was like, I didn't want to I know I could
00:45:16
probably do better in the market, but >> I don't care. I had the money. Certain
00:45:20
bet. >> I don't think you could have because because the difference, just to explain
00:45:24
it, if you invested $10,000 and I had 85 in the market, say I had 100, I'd have
00:45:29
to pay I'd have to pay capital gains on it. Whereas, if you apply it towards
00:45:33
tuition or school supplies, you get to you don't have to pay taxes on the gains. My point is the idea of giving
00:45:40
kids every baby born a retirement account. I wouldn't let them have access to 18 or 25. The problem is and the
00:45:47
thing that's going to bankrupt our nation as we continue to send more and more old people who vote old people more
00:45:52
vote themselves more money. We have to reduce entitlements for old people and this is the way to do it. And then so
00:46:02
they're not entitlements. They're investments. So they're not entitlements. they become investments. I
00:46:07
mean I think the danger obviously is if we remove it completely is people are you know subject to whatever theitudes
00:46:15
of the market and that's that's the always been the worry right that's why
00:46:18
it's called social security >> there has never been okay but there has
00:46:22
never you could buy any five stocks since the beginning >> the beginning of the markets you could
00:46:27
buy any five stocks in the S&P and if you hold on to them for 10 years you've
00:46:31
never lost money >> because of demographics and innovation the long-term trajectory of the market
00:46:36
now there's There's been decades where it's gone flat, >> but over the over the long over the long
00:46:43
term, there's nothing like the up and to the right of the markets. >> I agree. I put I put that money away and
00:46:50
I never paid a dime for college because it had been saved and put away. I And it
00:46:55
was all taxree. It paid for their their their dorms. It paid for their food and Alex eats a lot.
00:47:01
>> Um and it was it was it was great. And I was like >> that meal plan. Yeah. Michigan is losing
00:47:08
money on Alex. >> The very end of Louis college thing, uh, Alex went to a less expensive college
00:47:15
was just a little bit of money, but it was zero. It was the best money I ever invested. I have to say I was speaking
00:47:22
of which, Alexer turned 21. Congratulations, Alex. You're on your own. >> All right, Alex.
00:47:27
>> I know. Of course, he was studying last night. I was like, Alex, go get a drink.
00:47:32
My guess is he's already he's already done that. This is the bottom line or or
00:47:36
this is a theory you want to tap into. The most profitable businesses in the world tap into one thing and that is a
00:47:43
flaw in our instincts. We're desperate for affirmation. We're desperate for
00:47:48
free gaming. We're desperate for opportunities to procreate. So, we buy Ferraris. We go on Instagram and we
00:47:56
gamble. The highest margin products in the world tap into a flaw in our instincts. You want to reverse that and
00:48:03
tap into the following flaw and that is humans are really bad with respect to the time space continuum. What do I mean
00:48:10
by that? Because for the majority of our time on this planet, we haven't lived
00:48:15
past 35 and now we live to 80. People have no sense what they need >> of how fast time is going to go. and
00:48:24
they say, "Well, the markets are up 9 to 10% a year. That's nothing. I'm not
00:48:27
going to invest in the markets. I can make more money as a baller opening a restaurant or opening my company goes
00:48:32
public." >> You are going to graduate from college. You're going to blink. You're going to
00:48:36
have a couple kids. You're going to have some joy. You're going to have some
00:48:39
grief and you're going to wake up and you're going to be [ __ ] 60 years old.
00:48:42
>> It happens so fast. So, this is what you want to do. >> You want to at a very young age figure
00:48:50
out a way where you don't even get the cash in your hands. matching programs at
00:48:54
work, 529s, baby bonds, automatic withdrawals, and just a little bit of money from an early age. And then blink,
00:49:02
you're 65 and you look at that account, and you have a [ __ ] ton of money. This
00:49:07
is a flaw. This is your revenge on the This is a way you put scaffolding on the instincts that are flawed. Anyway, start
00:49:15
investing young. >> Scott, one more quick break. We'll be back for predictions.
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mongodb.com/build. Okay, Scott, let's hear up predictions. Is it about all birds now that it's an
00:50:09
AI business? No, just move along. >> Oh, I had two and one of them all birds.
00:50:13
Okay, so I I'll go to that one cuz that you're you prompted me. My my prediction
00:50:18
was going to be anthropic IPOs before open AI, but that's boring and I've
00:50:22
already talked about anthropic. So, I'll go to the one you suggested. Uh the all
00:50:27
birds pivot to AI will inspire a bunch of copycats. You're going to see CHE,
00:50:32
GameStop, Rent the Runway, all decide their AI companies. All so this is what's happened. Albert's the once hyped
00:50:39
sneaker brand. They just sold its IP for 39 million two weeks ago, down from a $4
00:50:44
billion peak valuation. uncomfortable is rebranding as but go ahead >> is rebranding as Newbird AI and pivoting
00:50:51
to leasing AI chips GPUs. The company is buying $50 million or secured 50 million
00:50:56
in financing to buy GPUs and lease them to customers and shares spike nearly 900% at intraday highs on the
00:51:04
announcement. Uh so what is this going to do? Just like remember when Bitcoin treasury companies went crazy and all
00:51:11
these different companies decided they were now Bitcoin treasury companies. So, we've seen this movie before and it
00:51:17
doesn't end well. Long Island ICT Corp. rebranded as Long Blockchain in 2017 to
00:51:23
ride the crypto wave and its shares were eventually delisted and the SEC brought
00:51:27
insider trading charges. Newbird, if you will, what I call Newird will s soon be
00:51:32
no. So, the prediction is the following. Albert and this ridiculous [ __ ] jazz hands pivot to AI that resulted in a
00:51:39
massive one day spike. ton of competitive, ton of copycats, and it doesn't end well.
00:51:44
>> What What does it end? How does it end? >> These companies have short-term pops.
00:51:48
The insiders who get the shares before they announce it dump the bag and then the people who think this is anything
00:51:54
resembling an a company with enterprise value end up losing a [ __ ] ton of money.
00:51:59
similar to all the blockchain tra all the Bitcoin treasury companies all when you try and it's like remember in the
00:52:06
early 2000s when I remember being in a meeting a board meeting at William Sonoma where we seriously contemplated
00:52:12
changing the name of the company to William Sonoma.com because we thought that would add shareholder value and
00:52:17
Howard Lester who was one of like the clearest blue flame thinkers in retail is like that's just [ __ ] stupid we're
00:52:23
not doing that. Uh anyways, when you're just trying to create the illusion you're in a hot area with absolutely no
00:52:31
domain expertise, IP or advantage, sure, call it AI a pop. If you're in Alberts
00:52:38
right now, just take it from me, sell, but you're going to see a dozen of these
00:52:42
things announced in the next >> People did mock it, which is good. All right. Um I I have no predictions today.
00:52:48
I I predict that Scott Galloway will be a star of my show this weekend. Everybody watch it cuz Scott is very
00:52:55
funny and actually has a lot of serious and significant things to say about healthcare and longevity and it's he's
00:53:02
really good. >> I don't remember that part. I remember falling asleep. I don't remember saying
00:53:05
anything substantive. >> You sound great. You sound really good. You actually say a lot of substantive
00:53:09
things. Anyway, he looks great and he's and you get to see him sleep. Anyway, we
00:53:14
want to hear from you. Send us your questions about business tech or whatever's on your mind. Go to
00:53:18
nymag.com/pivot. Submit a question for the show or call 8551 pivot. Elsewhere in the Karen Scott
00:53:24
universe this week on prof markets, Scott spoke with Katherine Anne Edwards, PhD economist and Bloomberg News
00:53:29
columnist on why AI is only one factor behind the challenges young workers are facing. Let's listen to a clip.
00:53:35
>> It's not as if the only thing standing between young workers and a job is what
00:53:39
private employers are doing or say they are doing or will do with AI. We have a weak economy and a weak labor market
00:53:45
with terrible social supports and almost no investment in people that don't have
00:53:49
a job. There are solutions that don't have to come from just knowing more about AI, but have to come from holding
00:53:55
our policy makers accountable for economic mismanagement. AI is today's story, but there will be another one.
00:54:02
Weakness is weakness in the labor market. We don't have great infrastructure for helping people who
00:54:06
don't have a job. >> That's 100% right. It's so true. Anyway, she's super smart.
00:54:11
>> Super smart. You like her. >> Anyway, that's the show. Thanks for
00:54:14
listening to Pivot. Be sure to like and subscribe to our YouTube channel. We'll
00:54:19
have lots to talk about next week. There's so many topics happening and we'll be back next week to do so.