Are We Screwed If AI Works? — With Andrew Ross Sorkin

22:16Big Technology Podcast Host:Do you do that? Definitely, all the time. And we, I mean, we have three Alexa Pluses or Echoes in the house and we're talking to Alexa Plus all the time.

22:23Andrew Ross Sorkin:And were you doing that a year ago though?

22:25Big Technology Podcast Host:No, because the capabilities have gotten so much better. Like my wife and I will have disagreements about something and she's European, I'm American. So we're typically fighting over what's better, the American system or the European system. We would never, we would tell the Echo previously to do that and it would play music or turn the lights off. Are you typing your newsletter? I'm typing it. You're typing it. I still believe in writing unassisted by AI because to me, that's the only way to think. Type it out. What about texting? Like writing to the bot and then...

22:58Andrew Ross Sorkin:No, no, no. Like an open call style thing. No, no, no. So, no, my wife sends me a text saying, are you late? Which is typically what I am. And then it used to be that I'd write yes or I'm 20 minutes behind. I type it. And now I just constantly like, yeah, I'm running late. Sorry, I'll be there shortly. I just I feel like I'm doing that all the time now, you know, just a completely different way.

23:22Big Technology Podcast Host:So there's definitely come a point. So I'll use AI for lots of fitness stuff, talking about, you know, diet, talking about workouts. And I used to be like typing it. And I'm like, why am I typing it in? You just press that microphone button, transcribes it perfectly. And then in it goes.

23:39Andrew Ross Sorkin:I don't know about you. You're into fitness. I know you are. I used to use MyFitnessPal all the time. I was like entering in the food. Yes. And when you could do it. Yes, yes, yes. Made a pretty good database. Yes. It took a long time. It was annoying. I had to constantly go in there. Now, I only usually do it for like a week at a time because then I sort of fall off the wagon. But I'll say, just ate a sandwich. This is, you know, it was da-da-da-da-da-da. And it will say, yeah, that was 300 calories. and it knows all of the macros and it can keep it going for weeks or months on end.

24:13Big Technology Podcast Host:I do that too. I program in like, all right, I want to like follow this. It was Peter Attia, but I won't talk about it anymore. Like this health guru's advice, can you give me like recommendations and count that stuff? And the crazy thing that you could do is after you've inputted that data for a while, what do you get in my fitness pal? Just a lot of data. In a chatbot, you could be like, tell me about my trends. Where am I weak? Where am I strong? What happens when I'm traveling versus when I'm not. And you get real insights from it. It's nice. Have you asked it to assess you?

24:44Andrew Ross Sorkin:Oh, absolutely.

24:45Big Technology Podcast Host:I mean, it's a little narcissistic to do, but yeah. But it's also, yes. And when are you going to get that type of analysis from someone who you're speaking with all day long and has drawn from all the literature? It's impossible.

25:00Andrew Ross Sorkin:If you say, please be my biggest critic, let me just tell you, this thing can be pretty harsh. Yeah.

25:07Big Technology Podcast Host:That happened to me with the fitness stuff where it was like, don't worry about the four slices of pizza you ate. And I was like, can you be a little bit tougher? And it's like, you're weak and you're breaking. And I'm like, that's what I want.

25:23So the interesting thing that you've been talking about along this line on your book tour has been if the AI companies can't make good on all the money that's been invested and there's a lot of debt there, then we could see some form of crash.

25:40Big Technology Podcast Host:Has the fact that they're starting to make real revenue changed your perspective there or made you feel a little bit better? OpenAI is now at a$25 billion run rate and Anthropix at a$19 billion run rate, although those numbers might be.

25:54Andrew Ross Sorkin:I feel better about it in two contexts. One is that they're making more money. And two is that I think when you really dig under the covers of a lot of these commitments that these companies have made to others, meaning data centers that are going to be built on the back ends of these things, or even some of the investments that we heard being made. Nvidia, you know, early on saying they were putting in$100 billion. And I think when you realize, and then we were looking at them and calling them circular deals and whatnot, that they really were going to come in tranches, that everything was tranched.

26:27Andrew Ross Sorkin:And those tranches make it safer because it doesn't mean that you're going to go out and spend$100 billion tomorrow, even though you don't have$100 billion today. So I do think that there's hopefully a, we're in a bit of a better situation in that regard. I still don't think we've taken full account though of two component parts of this. What happens in great success from a technology perspective in terms of the efficiency of these models? Could we ever get to a point where you actually don't need all of these data centers, where a lot of the compute moves to the edge. And then all of a sudden the economics of that sort of get upended.

27:12Andrew Ross Sorkin:So you could see it get upended on that side. And then the other side is, could the depreciation schedule of these chips either be way shorter or way longer than we think? And how is that going to work? So I think there's still a whole bunch of pieces of the puzzle that we haven't figured out.

27:28Big Technology Podcast Host:Yeah, that's kind of one of the hypotheses we've been playing with on the show now is, did Apple just do it right? where Apple becomes the infrastructure for AI, where it happens on your phone and on the Mac Mini, and the models become so efficient or purpose-built that you don't need the data centers.

27:45Andrew Ross Sorkin:It may very well be that that's where this lands. Even though they've done it by accident. Having said that, I would imagine that this should be the greatest opportunity for Google and alphabet effect or alphabet to truly take share because Gemini, if built the way I think it should be built, should be able to move you around their phone in shocking ways, right? It should be able to move into any app, control any app, do everything throughout the phone. I can't imagine that Apple, which really has made its name around privacy and controls and sort of walled garden even under this new deal that they're going to have with google and using gemini as sort of their siri are going to let whatever that is go super deep throughout the entire phone and so i would imagine that's why i've always i've always thought this should be google's time yeah and here i am holding my iphone and i love my iphone more than anything

28:51Big Technology Podcast Host:products too yeah but we haven't seen it yet and even though google's ai is better people haven't left the iphone for um for they haven't left the iphone and gone to gemini um so the book is 1929 uh 20 weeks on the bestseller list congratulations thank you the thing that's kind of scary is i think part of the reason why it's i mean it's about something that happened about 100 years ago and it's getting a lot of attention. And I think part of that is because people see parallels to now. We're in our own roaring 20s. We have our own market that's rip-roaring with a lot of people, maybe even more uneasy about it now than they were back then.

29:37Andrew Ross Sorkin:So, you know, I think a lot of folks look at the book and think, oh, it's a warning about today. And the truth is two things. One is when I began writing this book, I wasn't even thinking about today. That was not even on my radar. It was really much more about trying just to bring the public back to this moment so you could understand it. Because frankly, I didn't. And I thought once I got into it and started to understand these characters and who they were and what they had done, I thought, wow, this is an amazing world. the other part of it though is i think it's not just about today in a certain way i know people looked at the parallels today but i think i think we as uh the public citizens um are always trying to play this sort of pattern recognition game and we are always looking at history to try to understand the present in some ways so by the way when i was working on this book back in 2020 2021, I want to say, the whole GameStop phenomenon was happening.

30:40Andrew Ross Sorkin:And I remember the publisher of the book was like, Andrew, could the book come out like now? And I was like, no, no, no, I'm totally not finished at all. But you could have, I could have imagined if the book had come out then, you would have said GameStop and AMC and meme stocks and all of this was also like 1929.

31:01Big Technology Podcast Host:if we had had can i can i say something about that you were on the show i think in 21 yeah it was during the covet times we were all in lockdown you went to your home studio i remember in san francisco and i asked you that yeah and you said the problem that i see the problem in every financial collapse is the debt yes and so that so in the game stop that was the end of the discussion because it wasn't debt that was being taken on uh but one of the interesting things that you've said repeatedly on the tour obviously made clear uh in the book is that there if there's too much leverage yeah that's where you have the problem it's the dry tinder it's the dry tinder the problem is that we don't know and i just find it astounding that we don't know where the debt is in the system because so much of it is happening in private credit well private crude a hundred

31:50Andrew Ross Sorkin:percent i mean look i think that and we're seeing right now a lot of hand-wraining around private credit, a lot of questions about what that whole market's going to look like. And if that market seizes up, what does that do to lending in other parts of the economy? What does it do to real estate? I mean, you could see how it could have a big impact. I will say one thing we haven't really wrestled with is the private credit business really can't fall apart before, frankly, the private equity industry falls apart. Meaning, if you think about it, who has taken on the biggest loans from private from the private credit space it's oftentimes the private equity players or some of these tech players or some of these so the private credit people can't lose money unless the other people lose money first and we really haven't sort of grappled with with that and that's in large part because so many businesses today are private companies and the marks the sort of valuations are not in the public market.

32:53Andrew Ross Sorkin:It's not a day-to-day operation. And there is a whole sort of universe that I'd put in the category of mark to make-believe. And the incentive system is such that you want that mark to make-believe to go on as long as possible, because if you are the equity owner, you don't want to mark your market down, because by the way, then you can't raise new money. By the way, if you're the private credit firm, you actually also don't want them to mark it down, because it's going to therefore impact your own value. I mean, so you can see that it's a cascading effect. So I think there's a whole lot of people who are sort of holding on as tight as they can, hoping they can sort of bare knuckle this thing.

33:29Andrew Ross Sorkin:Maybe we can get to a place where, I don't know, Kevin Warsh gets in the seat and we get some lower interest rates and things kind of ease off and maybe the world gets a little easier.

33:38Big Technology Podcast Host:Okay. So I definitely want to get into what's happening in private credit today. And I think that for listeners, if we have technology listeners who aren't fully right into this, can you just briefly explain what is this private credit, private equity thing and why isn't happening in the big banks, but briefly. Yeah.

33:55Andrew Ross Sorkin:So very basic. In the old days, you'd go to a bank. If you were a company, you go to a bank, they give you a loan. You need money. Post financial crisis, in large part because of a lot of the regulations that were put in place, there became a whole other world where people basically created funds that look a lot like private equity funds. You go out and raise maybe a billion dollars and you'd say, instead of using that billion dollars to go off and buy companies, we're going to loan that money out to folks. And by the way, we're not going to give you the money back for 10 years. So we're going to give out a 10-year loan and you'll get the money back in 10 years, plus plus, hopefully.

34:33Andrew Ross Sorkin:That's the concept. And that's what private credit is. But what it means is the banks are not doing it anymore. It's living in this sort of private arena, which means that there's very little transparency around it. And then on top of that, you had a lot of private equity firms that, by the way, started buying up software companies and other things from Thomas Bravo's bought a lot of them. There's another company called Vista that's bought a lot of them. A lot of software companies, a lot of SaaS companies using the revenue, the sort of the monthly recurring revenue from those businesses to pay down these loans.

35:09Andrew Ross Sorkin:You take an enormous loan so you go buy one of these companies. Well, if you decide the software company is no longer a thing and may not have this reoccurring revenue, all of a sudden its value has to come down. And all of a sudden, therefore, they would have to lose all their money. And then if the credit guys would loan the money, they would also therefore then lose money too.

35:32Big Technology Podcast Host:And that is the worry that a lot of the money that's funding this AI build out is coming from there. Yes. Okay. Well, there are starting to be some shocks in private credit, and I want to speak about what that might mean and whether that is going to be the source of further problems. And then we'll talk a little bit about prediction markets and maybe the Fed, the new potential Fed chair when we're back right after this. I've interviewed a lot of great tech founders on this show, and one surprisingly universal challenge comes up again and again, finding the right domain name. It's something I ran into myself when launching big technology.

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38:05Big Technology Podcast Host:Get the word out like you have a marketing team behind you. Easily create email and social campaigns wherever your customers are scrolling or strolling. It's time to turn those what-ifs into with Shopify today. Sign up for your$1 per month trial today at shopify.com slash big tech. Go to shopify.com slash big tech. That's shopify.com slash big tech. And we're back here on Big Technology Podcast with Andrew Osorkin. He's the author of this great new book, 1929, 20 weeks on the New York Times bestseller list. So let's talk about this issue with the private credit. We'll keep going on what we were talking about pre-break.

38:47Big Technology Podcast Host:Reuters recently writes, private credit alarm bells echo 2007 subprime warnings. There's growing risk that the mounting stress in private credit could spill over into the public securities market. BlackRock, the world's biggest asset manager, with some$14 trillion under management, said Friday it had limited withdrawals from a flagship debt fund after a surge in redemption requests. A few days earlier, alternative asset manager Blackstone said it raised the redemption cap on its B-Cred private credit fund to meet record withdrawal requests. We're also seeing similar issues with Blue Owl. And then some companies are going bankrupt, including an auto parts supplier, First Brands, and a car dealership, Tricolor.

39:32Big Technology Podcast Host:So is this the beginning of the unraveling? And why are people panicking about this? Well, the reason they're panicking is not just that there's potentially something

39:41Andrew Ross Sorkin:underlying concern in the economy. It's that so many of these funds were sold to the equivalent of the retail investor. It's not just to the pension fund that is supposed to wait for 10 years for the loan to come due and then get paid off at the end. A number of these financial services companies have created what they're calling semi-liquid products. So effectively, you can buy into the fund. And when you buy into the fund, it looks like a stock. It looks like you're buying a stock. You can buy it on any given day. However, it's called semi-liquid for a reason. You can't sell it on any given day.

40:22Andrew Ross Sorkin:On most days, you can sell it. But if too many people rush towards the exit at the same time, the firms are allowed to say, excuse me, we're not sending you your money back right now. We're putting up the gates. And that's what you see happening right now. And so that's creating its own concern, that sort of run on the bank kind of feeling. Now, the financial services firms behind these funds would say, look, this is a feature, not a bug. It's in the literature. If you actually not just read the fine print, but if you understand what the product is, that's what it is. But I think any time you have a product where you think you can get your money back and you really can't, people get anxious.

41:07Big Technology Podcast Host:But it's not AI, right? Like I'm looking at it and it's car dealerships and auto parts suppliers.

41:14Andrew Ross Sorkin:I mean, I think that those are just a couple of the examples of companies that have struggled. But I think there's a broader question about, again, because technology, I don't want to say technology is volatile, but maybe it is. And because technology can change so quickly, there's sort of a real question about, like, what is the future really like? Right. And if the future really is different than where it is today, that also is a problem.

41:39Big Technology Podcast Host:Well, this is sort of, you used the word exponential earlier in our conversation. And this is sort of where the rubber meets the road, right? Because all this money is being invested in AI data centers, hundreds of billions of dollars this year, hundreds of billions of dollars last year, probably more the year after, in the belief that AI is improving on an exponential. And so private credit is funding a good chunk of it, right? You have companies like Blue Owl, for instance, who's funding a lot of the development. I mean, if you stopped getting that exponential progress, that would basically be the thing that could cause a panic.

42:13Big Technology Podcast Host:And that's where you get the, nope, you actually can't take your money out. Right. And things can go belly up.

42:18Andrew Ross Sorkin:There's a whole bunch of things that could go wrong. By the way, including, as we said earlier, the technology could get so good that you don't need the data centers. I mean, I imagine long term that AI is going to be very much like the Internet on steroids, which means that it will be here for a very long time and we will ultimately need these data centers. That is, to me, not really the question. The bigger question is whether there's going to be like a timing mismatch, that there's going to be some period of time. Same way, by the way, we had a dot-com bubble and bust where the economics didn't match the investments at that time.

42:57Andrew Ross Sorkin:Now, Amazon is still here. The internet is still here. It's bigger than it's ever been. But for a period of time, it didn't really work the way it was supposed to. And I think that something similar could happen in AI. The one other thing about data centers, which is a little bit more nerve-wracking, is it's not like putting, you know, people compare it to putting fiber in the ground. or building the railroads, you put the tracks down. Because once you build a data center, you probably are going to still want to upgrade those chips relatively constantly. So it's unclear whether the investment ever either stops or even slows down.

43:36Andrew Ross Sorkin:I mean, look, I'm so addicted to this phone, I buy a new one every year or two. And so I imagine people are going to want the latest, greatest, next technology.

43:46Big Technology Podcast Host:and so what does that look like right but the current the curtain video chips are actually the current video chips are actually being rented at prices higher from when they were were bought i mean that just shows i guess the demand but i'll tell you one story i was in utah uh skiing earlier this year and we were on the ski lift with the guy i was like what do you do and he's like well i build data centers out here i was like oh and i was like what do you think he goes all of this will go bankrupt really i mean i i don't think he has the full picture but that's i think what it looks like to someone who is in construction and sees the level of build out that's happening and it just doesn't compute it's unlike anything they've ever seen but it paid for the lift ticket did pay for that lift ticket so good time well he's like i'm gonna get paid exactly the question is about the person you know footing that bill so there is a an interesting um in the times that we're in.

44:43Big Technology Podcast Host:There's this sort of interesting argument that I'd love to put to you and get your perspective on. I'm sure you, or maybe you haven't seen this. There was a post that went kind of viral on X called the prison of financial mediocrity. Prison of financial mediocrity. This is like a late stage capitalism thing? Well, basically it was this person who talked about why we're, because we've talked a little bit about, about, you know, risky bets. And this person talked about how he said, I'm absolutely betting the house that long degeneracy is the prevalent socioeconomic theme of the coming century. And here's what he writes.

45:20Big Technology Podcast Host:The implicit deal used to be simple, show up, work hard, stay loyal, and you'll be rewarded. Companies offered pensions, tenure meant something, your house appreciated. While you slept, the system worked if you trusted it. Staying at one company for 20 years, he says, is now a career liability, not an asset. Wages grew 8 % while housing costs doubled and debt payments for young people increased 33%. The math doesn't support patients anymore. And this is sort of getting back to this theme of debt and the economy and speculation and bets when they shouldn't be made. Basically, what this person is saying is because the system is broken for so many people, that's why they're going to things like crypto, prediction markets, and sports betting.

46:08Big Technology Podcast Host:What do you think about this?

46:10Andrew Ross Sorkin:So I don't disagree with the last part of what you said, which is that one of the reasons why people are moving to prediction markets and moving to what I would describe as the sort of a lottery ticket approach to life. It's a little bit YOLO. Yes. Is a function of the inequality that we have in this country. I would argue to you that the American dream actually shifted in the 1920s of old times to this scenario of the lottery ticket scheme. I think what happened was you had a lot of people coming from all parts of the country into big cities. They were seeing the wealth that was being accumulated.

46:51Andrew Ross Sorkin:And I thought, how am I going to get a piece of this? The only way to get a piece of this is some kind of get rich quick scheme. That's the only way I'm going to get there. And so you had this sort of lottery ticket approach. What I haven't seen the tweet you're talking about, but what I think this person is referring to is what I. I call the leave it to beaver American dream. This is the paint by numbers American dream. This is sort of a 1950s American dream. if you went to college and you worked hard, you get a job, you get a house, a spouse, two kids and a dog with a white picket fence, and it all kind of works out.

47:33Andrew Ross Sorkin:I actually think that was a historical aberration that was not the way it used to be. If you look at the 1920s, it was not like that. If you look at the 1930s, it wasn't like that. The leave it to be for American dream that I think this individual is referring to, began post-World War II in a universe in which the United States was a monopoly power. Every other country in the world was out of business. We owned everything. We were the only player. And as a result, you had the rise of the middle class. You had unions. We could charge monopoly rents. If you really look at when wages in America started to stagnate, when?

48:18Andrew Ross Sorkin:late 70s, early 80s. Why? Because the rest of the world all of a sudden came online and all of a sudden we were competing again for the first time. And all of a sudden we started to raise questions about whether that Leave It to Beaver American Dream could still continue. First of all, by the way, the Leave It to Beaver American Dream was a very white dream. It was not a dream for all of America. They did not benefit during that period. And as I said, I think it was actually an historic collaboration. I thought it was a 30 or 40 year period of time that obviously happened, but I don't think you can always go back and look at that and say, well, that's the way it should or could be because I think we live in a completely new universe.

49:01Big Technology Podcast Host:Right. But the argument that this person is making is basically saying that the only place people feel agency right now is in the casino. Even though they know that prediction markets are rigged with insider trading, that's where they feel like they actually can control their life.

49:18Andrew Ross Sorkin:Look, I've experienced this in a very unusual way. You know, anchoring on CNBC in the morning, I remember during the SPAC, what would you call that? The SPAC trend, the SPAC craze, or even the GameStop craze. You know, I would be cautioning people in the morning. I would say, look, guys, this back thing is going to end badly, folks. This GameStop thing, it cannot. It just, I've seen the movie. I know how it ends. I'm telling you. And the reaction that you would get was, Andrew, you are so paternalistic. Stop trying to protect me. You are not protecting me. In fact, by you thinking you're protecting me, you're protecting the man.

50:03Andrew Ross Sorkin:That's what they would say. Because I do think that people think that they have agency in these casinos and they want the lottery ticket. That's what they want. But I, I mean, it's just such an irrational thought to me that I can't even think straight about it.

50:19Big Technology Podcast Host:Yeah, I mean, it's not institutional debt, right, which is what causes these crises, but it is, I think it's a pretty big risk right now for the societies where this exists. I mean, you've heard the stories, I'm sure, of people taking their student loans and putting them into FanDuel. Now, I'm sure that doesn't happen all the time, but everybody out there is sports betting, and a lot of people are losing.

50:42Andrew Ross Sorkin:People forget, by the way, about lottery tickets. I don't know if you've ever thought about this. You know, in most states in America, you cannot buy a lottery ticket with a credit card. It's illegal. You can only buy it with cash or a debit card. And the reason is because they don't want people to overextend themselves by buying lottery tickets. And yet we've now built this entire apparatus for even much larger gambling if you will, in terms of prediction markets, sports betting and everything else. And people are just YOLOing it on debt.

51:19Big Technology Podcast Host:Yeah. I mean, one more thought about this. In the book, you highlight that actually in the 20s, in the era of speculation, they talked about it as democratizing finance, which is a tagline that's come back. I mean, it's what Vlad Tanev talks about all the time, democratizing finance.

51:34Andrew Ross Sorkin:CEO of Robinhood, yeah. CEO of Robinhood. I mean, that's the whole idea is trying to democratize finance, trying to, you know, the prediction market guys would say, you know, you have an expertise in something. I want you to have access to be able to make money using that expertise.

51:49Big Technology Podcast Host:So, but then the question would be, well, why should people be shut out from these? Like why, why just, you know, let's just actually bring it full circle. The private equity people have made a ton of money by exploiting this ability to invest in opportunities that are not available to the everyman. So why should they be shut out of, or why should they be cautious when those that have this brighter appetite for risk are doing great?

52:16Andrew Ross Sorkin:So this is a great question you're asking, and it's really like a philosophical one more than anything else. In the United States, we have investor laws that effectively suggest if you don't have a million dollars, that there's certain types of investments, typically in private equity, venture capital, and other things that we don't allow you to make because we think they're risky. And the view is that if you don't have a million dollars or are essentially educated enough, but we'll take the education piece out, the sort of money dollar number is sort of used as a proxy for that in some ways, that without the million dollars, you can't afford the loss.

52:58Andrew Ross Sorkin:And the truth is, depending on how you run a country and a social safety net and a system, if you can't afford the loss, then the loss gets fully socialized. So this becomes the fundamental question. Now, you could also argue that we have socialized losses for banks. During the pandemic, we socialized losses for, well, everybody. So there is a question about who we're socializing losses onto, but that's a little bit of how at least I think about the risk schema, if you will.

53:35Big Technology Podcast Host:You know, one of the things I thought about when I thought about this crash in 29 was it seems like our institutions have done a good job of keeping us out of potential crashes since maybe with regulations or bailouts. I mean, we have$30 trillion in debt in this country, so maybe that will come due.

53:52Andrew Ross Sorkin:Well, one of the lessons, the big lesson of this crash in 29, and I think we learned it, and Ben Bernanke did his thesis on the Great Depression at Princeton, sort of put it into effect in 2008 is when you have a crash, you can't move into a period of austerity. You actually have to throw money at the problem. As politically unpopular as the bailouts are, the Federal Reserve needs to throw money in. The problem with that now is we now did it in 2008 and it worked as unpopular as it was. By the way, we did it again during the pandemic. So now I think we have a playbook or we think we have a playbook.

54:28Andrew Ross Sorkin:We're like, okay, we can avoid a really nasty situation if we just print money. But you're right. We have$38 trillion of debt now. By the way, back in 1929, there was a government surplus, a budget surplus at the time. And the next time, well, someone's got to probably write a check for$5 trillion or whatever it's going to be. And so if that happens, you tell me, is there some invisible line that becomes a red line where the investor class in the world says, we're going to lend you money, but you got to pay us like two, three times we used to pay us. And if that's the case, then you do move into an austerity period.

55:04Andrew Ross Sorkin:And then all of a sudden you are back in the soup.

55:07Big Technology Podcast Host:And this is kind of what I was setting up is that we, through these crises, when the Fed has stepped in, have had decent independence of the Fed. And it doesn't seem like that's going to be the case. Like those walls are in the middle of eroding. There's a criminal probe from the White House into Jerome Powell about this renovation that he did of the Fed headquarters. And right now, Kevin Walsh, who's been nominated, that nomination is being actually held up by Tom Tillis, who's not happy with the fact that the executive or the White House is influencing the Fed in this way. How important is Fed independence from politicians who obviously will want that money to be spent no matter what, if we're going to have a system that doesn't get into another crash.

55:58Andrew Ross Sorkin:So I'm generally of the view that Fed independence is hugely important, especially because typically if you do get into a crisis situation, you often have to make hugely politically unpopular decisions. If you just were playing politics, you might not do some of these things. And that's a problem. The question that I don't think we will know until a year or two or maybe even three from now is Kevin Warsh, who I've known, by the way, for many years, who is very, very bright, clearly has gotten this job in part because the president believes that he's going to follow what either the president wants or that currently their thinking is aligned.

56:39Andrew Ross Sorkin:To lower rates. To lower rates. It'll be very interesting to see whether, A, Kevin Warsh stays in line with the president. I, by the way, think he could be an independent actor ultimately because interestingly, once you get this job, the job is yours. It's a little bit like becoming a Supreme Court justice. There are people that the president's appointed that have then, you know, decided against him. So I think it's possible. The other thing is the Fed is a little bit like the Supreme Court also in that just because you are the chair in this case, Kevin isn't the one who isn't the only vote. He has to convince all of these other people to do what he wants.

57:26Andrew Ross Sorkin:And I would imagine the first six months, it's going to be a challenge to get everybody to back this view. I think that it might be a honeymoon period. Maybe they sort of throw a bone, throw an early bone. But I think there's going to be meaningful disagreements on that board about which way the economy is going and how fast to act. Especially, by the way, if you have a continued war in the Middle East and Iran and, you know, we have this jobs issue. We obviously have a continued inflation issue. The answers are not so obvious. Yeah.

58:02Big Technology Podcast Host:All right. Let's do a quick lightning round before we go. Okay. How do you stay in such good shape? I mean, you are doing CNBC, The Times, writing a book. You're just saying, MyFitnessPal?

58:13Andrew Ross Sorkin:What's the secret? Well, maybe it's Chachi Pichino. I try not to eat too much food after basically 6 or 6.30, because I try to be in bed by like 9 or 9.30. That helps. Well, but I'm also waking up at 4.30, so it's a little complicated. So I think food late at night is the enemy. And I don't drink at all. At all. At all. When was the last time you had a drink? Oh, my goodness. I can't even remember. Maybe a sip of my wife's margarita at Christmas time or something. Okay. But hardly ever. Otherwise nothing. Okay. And I'm reversed to sun.

58:53Big Technology Podcast Host:Sun. Sun. Just sun in general.

58:56Andrew Ross Sorkin:Yeah. I wear hats. I'm always like - That's helpful.

58:59Big Technology Podcast Host:I just think that's good for the skin. Satana lotion. Yes. Yeah. Agreed. All right. Thank you. That's a mystery I've been wondering because, I mean, for someone with your output, it's very impressive. All right. Why not wait for the next crash to invest?

59:13Andrew Ross Sorkin:Why not wait for the – because the truth is it could be a while. And famously, to bring it back to 1929, Charlie Merrill, who was the co-founder of Merrill Lynch, famously told everybody to get out of the stock market in 1928. And you would have thought, oh, this guy is really smart. Except the stock market from 1928 to September 1929 went up 90%. So it's possible that if you're waiting, you could be waiting four or five years. And then even if it goes down 25, 30 percent from there, you've missed it.

59:50Big Technology Podcast Host:Dealbook is one of the best. What do you think the key is to running a great event? The Dealbook Summit? The Summit.

59:59Andrew Ross Sorkin:i think that the best events are those events that have these sort of memorable moments uh that there's like little takeaways that everybody who's watching it is looking and not only seeing not necessarily seeing the same takeaway but that they're looking for these little morsels um but

1:00:21Big Technology Podcast Host:Can you plan for that? Like Elon Musk telling someone to F themselves? I mean, having him.

1:00:27Andrew Ross Sorkin:You can't plan for it, but you can in a way. I mean, I do think that I spend extraordinary time, oftentimes 20, 30 hours prepping for each of those interviews. I mean, it was a wild situation. The month or two beforehand, I really basically do practically nothing except that. and you can't control an interviewee, but I think if you have lots of different places that you can go and places you can move the conversation around to, you can create opportunity.

1:01:00Big Technology Podcast Host:Why doesn't Jeff Bezos speak more often? I mean, he was at DealBook. He was at DealBook two years ago. Yeah. I feel like every time he speaks, it's a very worthwhile conversation, but he doesn't talk.

1:01:13Andrew Ross Sorkin:I completely agree with you. I think he's fascinating. I think he's got some very fascinating views. And not just that, I think he's obviously in the middle of everything between Amazon, what Blue Origin's doing, obviously the Washington Post. You know, one thing that he said during that interview, which I do think maybe explains why you don't hear as much from him, is I asked him what he feels misunderstood about. Right. And he said that he gave up a long time ago on being understood. He said it was hard enough to be understood by your family, let alone the idea that you were ever going to get the public to really understand you.

1:01:58Andrew Ross Sorkin:That might be your answer.

1:01:59Big Technology Podcast Host:That could be it. SpaceX IPO, obviously biggest of all time. Do you think it outpaces open AIs?

1:02:07Andrew Ross Sorkin:Oh, I imagine it does. I mean, we're talking, I think the number's now$1.75 trillion with a T. I think right now OpenAI doesn't start with a T yet, but maybe it will. It could. It could, but I don't think it's coming in on two Ts yet. Not yet.

1:02:27Big Technology Podcast Host:Do you think there's going to be enough money to fund all these IPOs? If you think about SpaceX, OpenAI, Anthropic going out within a year and a half of each other.

1:02:37Andrew Ross Sorkin:I think the big question is, you know, we're talking about these extraordinary valuations, but we need to really see how much each of these companies plans to raise. Because it's not that they're raising$1.75 million. They could very well raise a billion dollars and still have that kind of valuation. So I think we're going to have to really dig into what these filings look like when they come out. I imagine they're going to want to raise a lot of money. I imagine they're all going to want to raise a lot of money. And that's why I think there is such a race to go first, because I think it gets to both the question and I think almost implied answer, which is, you know, if SpaceX goes in, call it June, and they take a big chunk of money out of the market, if you will, then whoever comes next may have a little bit less, you know, smaller bite.

1:03:26Andrew Ross Sorkin:And whoever comes after that probably has a smaller bite after that.

1:03:30Big Technology Podcast Host:What do you think of these new leaders? Dari Amadei, Sam Altman. They're less careful than the rest, it seems. um you know i found them fascinating you know they are real founders yes and i think one of

1:03:48Andrew Ross Sorkin:the things that we've all become accustomed to in recent years is a lot of companies are no longer run by the founders they're run by managers and operators and i think when you are a founder you have this um you have a license an authority to sort of really either make decisions or and not just make decisions, but say things sometimes that are unpopular. I mean, I, by the way, I give great credit to Dario in this whole wild fight he's having with the Pentagon for just how outspoken he's been at a time, frankly, when most CEOs in America, you know, are hiding under the table right now. Yeah, I think lack of care, like being less careful, that's a compliment for me.

1:04:30Big Technology Podcast Host:Yeah. I think that they speak in a real way. Yeah. I hope that doesn't go away, although we see that it tends to. All right, last one for you. Could we have a market crash today on the magnitude of the 1929 crash?

1:04:46Andrew Ross Sorkin:So here's the good news. I think it's hard to end up in 1932. 1932 is 25 % unemployment and an economy that goes truly, truly south. In 1929, we had a stock market that fell about 50 % between October and November of 1929. But people forget by the end of 1929, the stock market was only down 17%. The reason everyone got flushed out and it was such a crisis was because everyone had taken on such extraordinary debt. People had been, you know, put down a dollar there and lent 10, 10 to 1. And so when the market fell 50%, nobody could hold on long enough to get back to even negative 17%. They had to sell their home, mortgage their house, lose their job, all the things.

1:05:35Andrew Ross Sorkin:I think that's harder to do today in part because individuals don't have that much leverage in the system. So I'd like to think not. And I also think we have this extraordinary playbook, which we now know works to some degree. But I think when you layer on AI and technology and the current state of national debt, it could all get complicated pretty quick.

1:06:02Big Technology Podcast Host:All right. The book is 1929. Andrew Ross-Organ, thanks so much for joining us. Thank you for having me. All right, everybody. Thank you for being here. We'll see you next time on Big Technology Podcast.

1:06:21You