456 The Los Angeles Lakers sold for $12.5 billion in 72 hours | The Pirate Street Journal

0:00Thanks for pressing play and welcome to this very special episode of the Pirate Street Journal. My name is Christopher Lochhead and yes, I am also the host of Follow Your Different. And what you're about to hear is something that I've been dreaming of for quite some time and we got a lot of feedback that people wanted us to do it, so we're doing it. And so what the it is, is a regular look at kind of relevant business news through the category design lens. it's predicated on the crazy idea that the Wall Street Journal doesn't know how business works. And as outrageous as that sounds, it's true in the context of most business press is focused on companies, maybe products and technologies, but almost never market categories.

0:49And so what the Pirate Street Journal is, is we take three important business topics of the day. And Eddie, Bree, and I look at those topics through the category design lens and share them with you and in and out in 30 minutes. It's the Pirate Street Journal. It's a very different look at business, and I sure hope you enjoy it. And we're going to be releasing PSJs on a regular basis for the foreseeable future and drop our regular follow your difference that are either one-on-one with me or a conversation with a legendary guest. So without any further ado, this is the Pirate Street Journal on Folly or Different.

1:25Hey-ho, let's go.

1:43Christopher Lochhead: Topic one, the Lakers just sold for$12.5 billion, the most anyone has ever paid for a sports team. The seller had owned them for about a year and he said yes in 72 hours. Topic two, book publishing is having a nervous breakdown over AI. One study says a fifth of Amazon ebooks are substantially machine written and literary agents are now being asked to work as police. Topic three, a mother and daughter in Kentucky turned down a$26 million offer for their farm once they found out what was going on on it. Their town has been at war ever since. We are recording on Friday, August 21st. Welcome to a bonus episode of the Pirate Street Journal.

2:22Christopher Lochhead: Hey ho, let's go. Topic one, the Lakers. $12.5 billion, the highest price ever paid for any sports franchise on earth. Mark Walter bought the Lakers about a year ago at a$10 billion valuation, which was the record at the time. Josh Kushner called him out of the blue and asked if he'd sell. Walter accepted in under 72 hours. The team was not on the market. Walter needed the cash. The U.S. attorney in Manhattan and the SEC are investigating how billions in loans tied to his conglomerate ended up on the books of his insurance companies. Those insurers have a plan to dispose or restructure most of those investments by the end of this year.

3:01Christopher Lochhead: He has also signaled he'd sell his stake in Chelsea. Now look at who bought it. Kushner runs Thrive Capital, one of OpenAI's largest shareholders. Thrive got in at a$29 billion valuation. Open AI is now valued at$852 billion, and Bob Iger, the former Disney CEO, advises Thrive. The two of them had been chasing an NBA expansion team in Las Vegas. The price kept climbing, so they went after a franchise that already existed. And the Lakers are going into a Thrive vehicle called Thrive Eternal, built specifically for assets Kushner believes are immune to technological disruption. There's also a tax story here.

3:39Christopher Lochhead: Buyers of sports franchises can write off essentially the entire purchase price over 15 years against other income. On$12.5 billion, that's roughly$830 million a year in paper losses, sitting next to a portfolio stuffed with AI winners. The Buss family owned this team since 1979. It is now a hedge against the thing its owners are also betting everything on. So Eddie, in every category you've studied, the supers are the ones who care the most. what happens to an iconic franchise when the people who own it aren't supers of the team or even the sport? Well, I think the super sports fans, the diehards, you know, Christopher with the Niners, you're in trouble.

4:21That's my short answer to this. And the reason being is that this is probably hyperbole, but this might be the great financial crisis of 2008 for the billionaire class. And let me unpack why I think that's the case. 2008, what happened? We were over-levered. The everyday consumer had taken out too many home equity loans. They bought too big of a house. They were qualifying not on income that they had sufficiently. You know, there was a lot of loose guardrails. People bought second home vacations. Everyone was over levered in real estate and there was a great reckoning. And it caused real estate to crash.

4:53It caused, you know, Countrywide to get bought by Bank of America. The stock market crashed. It was a horrible, horrible time. Now, if you look at what's happening with sports teams, there's a couple of things that are going on. And there's a lot of forensic accounting that's necessary here. One is that these sports teams have gotten real expensive real fast, right? Is that it was not long ago that the NBA could not find a buyer for the New Orleans Hornets and they had to buy it. And this is when the price points were in the hundreds of millions of dollars, right? And now we're talking about not billions, but tens of billions.

5:24Okay, this is a different level of stratosphere. Secondly, the NBA states, the rules state that a single PE fund or institutional investor can only contribute 20 to 30 % of the purchase price. This is really important. And the second one is that debt, I didn't know this, is hard capped at$475 million per team. So what this means is that it is the inverse of the private equity playbook. Meaning most of the time, private equity firms, they put up a minimum amount of real cash and capital and they lever it up. And it's not their cash and capital, they have limited partners. They have brought in other money from other partners.

6:04A couple of private equity firms might combine. When Nielsen bought the Cambridge Group, my old consulting firm, it was bought by six consulting firms and they distributed the risk that way. You cannot do that with an NBA team. So that's kind of point number one. Point number two is that there are only three current NBA owners who are wealthy enough that they could rebuy their teams at these valuations at 25 % of their net worth or not. That's Steve Ballmer, who owns$145 billion, mostly in Microsoft stock, right? Good for him. Didn't, you know, he held, you know, steady. He held fast, right? Christopher on your tattoo.

6:37The Allisons who own the Mavs have$40 billion. There might be another team out there that can do that, but the reality is these owners, these billionaires, they are wealthy. They're not always liquid. And oftentimes they are wealthy because they are concentrated in assets and investments that are the driving source of their net worth. And so you have Mark Walters who did not have$10 billion. This is what's become patently clear, is that he did not have$10 billion and he might be in big trouble for borrowing against insurance funds that he shouldn't have done. Domino number two, because it's not just that.

7:12It's Matt Ishbia, the owner of the Suns, bought the Suns for, I think,$4 billion. He did not have$4 billion in cash. He had a huge stake in his mortgage company that he pledged as collateral against that to buy the Suns. Now, he made a bet that put his company at risk because he thought interest rates would go down. They have not gone down. He's probably facing a margin call where he will have to sell part of the sons or find another source of capital or whatever else it is. And that as amazing of a business person, investor as Josh Kushner is, and as amazing of a CEO as Bob Iger is, they do not have$12.5 billion.

7:51They do not have it. And the NBA will not let them bring in other partners in a huge degree and will not let them lever it up. So how do they buy it? These billionaires are taking on risk they would normally not take on because teams are not just about money. They are about ego. I will ask Christopher this. Like Joe Lacob, top tier Silicon Valley investor, right? Probably got more shine out of being the owner of the Golden State Warriors than being a Pioneer Perkins partner and the like, right? Right. And so nobody outside of Silicon Valley knew who he was. And that was a problem. Why? I don't know.

8:27But exactly. So this is the issue that's at hand. And I don't know where this is all going, but it makes me nervous because what implies is that Josh Kushner, I think reportedly has a huge stake in open and anthropic. Okay, what does that mean? He wants them to go public so that he gets liquidity. Who is his exit liquidity? Retail investors, right? This is the real risk that we have here. We talked about this with SpaceX. The IPOs go up, they often crash down. And so I do not want to be a chicken little here, but I am nervous when the apex predators in the financial capital stack are over-levering, taking on more risk than they have.

9:04There's a lot of funny business going on here. and that in order to kind of make good on some of these investments that they will never have a chance to buy again, like you're not going to have another chance to buy the Lakers again, you're going to need to sell other stakes that will put pressure on pricing and everything else. And so this is a big concern. I do not know where this goes, but what I do know is that at the end of the day, who are the losers in this? Not the owners. Again, they are the most sophisticated investors in the world here. The players, the owners have consistently outfoxed and out-negotiated the players.

9:37Hard cap, salary cap, whatever else it is, second apron. The cities, you know what owners do? Well, guess what the Portland Trailblazers buyer just did? Build me a new stadium or I'm moving the team. They're going to screw over the local municipalities and cities. You know, the Chicago Bears might be the Hammond Bears because they can't get a stadium funded and they're threatening to move the team. And then lastly, I just do not see a world where the consumers are anywhere but last. in terms of the preference stack, it's going to go owners, players, cities and municipalities, and then consumers at the end of the day.

10:12Because what's going to happen is concession and ticket prices go up. Your favorite players will be traded to save money, just like the Celtics traded Jalen Brown. And what's going to happen is the willingness to build a dynasty like the Spurs, like the Bulls, like the Warriors. Now, that's just going to go down. If an owner can win a championship, that's great. But the owner will consistently choose cash flow over championships every day of the week when this much risk is at stake. Here's why the leverage scares me in addition to everything you just said. I was just checking. In the last three years, any idea how much the S &P 500 is up?

10:50Almost 75%. So what does that mean? What that means is anybody with money in the market, and wealthy people have money in the market, is feeling very flush right now. Hey, let's go buy Lambos and villas and airplanes, oh my, and sports teams, right? So they're very flush feeling. And when you're feeling that way and you think that everything goes up and to the right forever, even redwoods do not grow to the moon. listen we've had a hell of a run here these runs don't last forever i'm not saying it's going to end anytime soon as a matter of fact i think the doomsday uh uh people the the merchants of doom have got it completely wrong we are right now as we speak at a almost if if not all-time high very close new company starts in the united states of america roughly half a million a month right now are being started, just under 500 ,000.

11:51And there are a lot of other positive indicators. But that said, this is not going to go on forever. And to your point, when the tide comes out, as Warren Buffett all told us, we're going to find out who's swimming naked and who's not. And I think we're going to find a lot of people with their trunks off. A couple other things. Why are these things so valuable? Well, here's what I think is going on. Years ago, we wrote about that native digitals are a new category of human. And the more digital our lives are, the more valuable legendary IRL experiences are. Why are these sports teams worth so much?

12:32Well, they are a lived experience in the parlance of our time, to quote the big Lebowski, that people really want that is unreplicatable. That's a great word for early in the morning after the night that I had with no coffee, just for the record. Any other way. They're also appointment viewing. So even if you are at home, they're appointment viewing. Why is Netflix getting into the live entertainment world? Why is Netflix doing MMA fights and boxing and sports and all of these things? Because it's the only appointment viewing left. They destroyed, it is kind of funny. They destroyed appointment viewing, and now they're trying to buy appointment viewing.

13:12And then I'll just say this one other thing, and I want to be thoughtful here, but I happen to know the founders of Qualtrics. Qualtrics are one of the greatest enterprise B2B category design success stories, and we helped them along the way. And so I know Ryan, Ryan Smith, and he is now the owner of the Salt Lake basketball team, and he owns several other teams. I believe he owns the Major League Soccer team, and I know he owns a minor league baseball team, and so forth. So he's gone hard to the hoop. He essentially levered himself with his Qualtrics gains into becoming a sports magnet. Now, here's the interesting thing.

13:55Ryan loves basketball. Ryan loves sports. Ryan is spending, quote-unquote, too much money on his athletes. I've been to their training facility where they train. It's gorgeous. I've talked to the players. I've had lunch in the players facility. He feeds them all day, every day. This is a first class operation and he loves it. And he hired one of his heroes, one of the greats of all time, Danny Ainge, to be the president of the team. And when you go meet Ryan, you meet Danny. And Danny's a basketball player's basketball. Danny has a, in his office, he has a Bill Walton commemorative jersey hanging.

14:42You know how much Bill means to me. Anyway, what's my point? My point is the following. Ryan is a guy who, quote unquote, made a dumb financial decision. He took his money from Qualtrics, levered it up, and bought all of these sports franchises. What we have is a fan who owns teams. in this sense, and I mean this in the most laudatory way, you got a big kid with money having a great time. He loves it. And he's also elevated Salt Lake in a whole bunch of ways, turning it into an entertainment capital in a way that's really powerful and the city's taking off and the state's taking off in ways that it hadn't before.

15:22He's part of all that stuff. So two big things. A, when fans on the team and fans who love their community, Ryan loves Utah, loves Salt Lake, loves Provo. Community guy, wants to elevate everybody. His number one thing is he says they're in the experience business, and he runs the business off lightning strikes, but that's probably another story for another day. So when fans own teams, good things happen. We saw that with Mark Cuban. The Mavericks only won one championship. That's when Cuban owned the team. I believe he was the first to sit down on the court and yell and scream at the refs, and he got fined for it, and we all loved watching it because he was a big kid who owned the team and it was fun.

16:02And then IRL experiences that are appointment that can't be replicated at home increase in value over time as we get more native digital and more native AI.

16:15Christopher Lochhead: Topic two, AI and book publishing. In July, a literary agent pulled the plug on a multi-million dollar debut novel because it could not verify that its own client had written the book. In March, Hatchet canceled the U.S. release of a horror novel over AI allegations. Last month, The Atlantic reported that a dystopian romance whose rights Simon & Schuster bought and which have been sitting on bestseller lists showed the hallmarks of AI. Simon & Schuster is standing behind it. Last year, 70 authors, including Margaret Atwood and Jonathan Franzen, signed a letter asking publishers to pledge they would never release books created by machines.

16:53Christopher Lochhead: The Big Five have mostly refused to take that pledge. A Stony Brook researcher found that 20 % of Amazon eBooks in his data set showed substantial AI assistance. And the CEO of Bookshop.org estimates that around 99 % of those books exist to trick a customer into buying something plagiarized, wrong, or empty. The Authors Guild has responded with a human-authored certification, which works on the honor system. You sign an attestation. Meanwhile, the only line the industry can actually enforce is copyright because AI-generated text cannot be copyrighted. Everything short of copying and pasting from a chatbot is a gray area.

17:33Christopher Lochhead: One agent at WME says a badly written submission now feels like a breath of fresh air. That's the whole story in one line. The supply of competent prose went infinite, and publishing discovered it never built a way to prove where a book came from. So Christopher, what do you think about publishing's answer to Infinite Supply being a sticker on the honor system? They're idiots. Idiots. No one cares. No one fucking cares. Look, people say, oh, I don't want to read a synthetic book. Right? And the folks at OpenAI have done something that I believe is really, really bad, which is they've embedded a scarlet letter in all content created with their platform.

18:19We can talk about that if we have time. Claude. What did I say? Claude, not OpenAI. Oh, excuse me. Yes, Claude Anthropic. Yes, thank you. And so, look, this is stupid. does anybody say oh this math was done with a spreadsheet oh this is synthetic this is synthetic math it's not real because he used a spreadsheet does anybody say oh he used a slide rule so that's invalid you have to be able to do it yourself so what now i gotta i gotta mow the lawn with uh with scissors what what are we fucking doing here you know music nobody said that Les Paul, when he created the electric guitar, created the synthetic guitar, or the effects pedal, the wah-wah pedal, well, that's not real playing because you're not making the sound.

19:11You're using this effects pedal that's technology, and so therefore it's invalid, et cetera, et cetera, et cetera, et cetera. Listen, here's the net of it. From the minute the paintbrush was created, humans have used technology to create art the technology has changed now look i get it there there are a whole bunch of bands out there right now that market themselves as human and they're not and some of them have very big followings so i think what's disingenuous is If it's 100 % technology, I'd like to know that these people in this band aren't real people and not feel duped. So if the AI wrote the novel all by itself, so to speak, with a little bit of prompting but not much human, okay, maybe I want to know that.

20:07But here's what no one cares. If a human wrote the book by having a vibe-creating session of prompts over a period of days or weeks and wrote a great book that people think is compelling to read, no one cares. And so all of this scarlet lettering of AI creations is ridiculous. Now, we do have to be careful about deepfakes. Absolutely. because today you could create a video of Xi saying that he is declaring war on the Western world and the missiles are flying, and that's a very scary thing. So regulations require identification of that stuff is required. I get it. I'm not stupid. And human beings have been using technology to create art for thousands of years.

20:57This is not different. If people like the art, they're going to buy it. It's that simple. Synthesizers weren't called, oh, that's not valid music because that's synthetic piano. No, it was cool. Synthesizers took off and they're used all over the place, et cetera, et cetera, et cetera. Yeah, this is where I wish, to your point, the focus was on the end user, the readers and the outcomes that they got. Presumably somebody, if a book, however it was written, if it's on the bestseller list, I assume that means people are liking it and got entertainment or education out of it. That's kind of the assumption there, right?

21:34Is that you don't get on the best. So, I mean, obviously there, we know that there are shenanigans to get onto the New York Times list and this and that, but if the book has staying power from a sales perspective, people must like it. And you could argue that, you know, John Grisham's books are formulaic and which is, you know, but he still wrote them and people are entertained. They're, maybe they're repetitive. It's the same story told in a different context, But if you like it, you like it. And that the reality is... Every episode of Law and Order is the exact same. It's formulaic. You watch one, you've now seen 10 ,000.

22:04And that the reality is what the publishing industry and all the AI naysayers need to understand is like, what is the outcome that you are looking for? And then sometimes it's, I just want to be mindlessly distracted and reading some dumb stuff that will just take my mind off of the flight that I'm on. or I just want to chill out or whatever else it is. Or maybe it's I want to learn something so that I can do it myself. I could care less how I get there. It's a recipe book with it. Or maybe it's a I want to be challenged. But like you think about each of those things and that the reality is in the same way that we talked about writing the$100 book and what the publishers have no credibility on this because all they have done is take the average price of the book and keep it flat for 30 years.

22:50They have not done anything to upgrade the category, to grow the pie and that what they could really be doing is not reacting, but leading by embracing AI on the user outcome and experience. And so for an e-book, you know, what has largely been is a land grab by publishers of like, hey, I can sell it for slightly less and I have zero marginal costs, so I make a lot more money on it. Audiobooks are the worst. Audible, we're looking at you. You guys are the jerks of the category. Stop taking all the creative money out there. And in fact, what you could be doing is investing on the other side of it where you have a Kindle or an ebook, hey, you're not flipping the pages that quickly.

23:26Maybe you should skip this part and go to the next one. Hey, you're highlighting this. By the way, if you jump to page 173, you'll find something that you really like about it. Oh, and or there's something other. Here's another author or another book that you might be really interested in. Same with an audio book. If you're listening to it and somebody goes back or skips ahead, like that's all data and signal for what you're actually looking for. And that if I was king for a day, I would have any one of these, you know, Hatchet and Simon & Schuster and all these other companies of like, how can I have AI as part of the reading experience where it is reading it alongside the user in a physical book, reading it on a digital book and helping them understand, hey, why are you doing this?

24:08What outcome do you want? And how can I help facilitate the outcome? If you are using a book for entertainment, cool. By the way, for a dollar extra, here's a couple of other books that will entertain you because you seem to like this type of a thing. if you're using it for education, here's a workbook. Here's a spreadsheet. I love your point about synthetic math and calculators and spreadsheets are an amazing thing. The outcome is I want to know if two plus two equals four, and can I afford to pay for this or not? And you understand the outcome. You can reverse engineer the product. Here's the proof they're stupid.

24:38You ready? Pixar. Oh, those are synthetic cartoons. We're not watching those. They were created by a computer. Well, look, if you're an animator, I understand why this might not be great news when Pixar emerges 25, 30 years ago, whenever it was now. And check me here, Brie, check me here, Eddie. I believe they might be the most successful movie studio in the world. They certainly were for a time. I don't know if they've had a flop, but they went probably two decades with nothing but blockbusters. Oh, those are synthetic cartoons. You're not allowed to watch it. You know what? We should put a Scarlet there.

25:20There should be a warning. These cartoons were created with tech. You know what? These cartoons were created with data centers. Anyway, we love Pixar movies. Everybody loves Pixar movies, and nobody puts a Scarlet letter on them because they're created with servers and data centers. Pixar is a great example because I think one of the things that they realized early on when the technology was new was that A, there was going to be a lot of skepticism. so they had to be very very thoughtful that when they did computer animation it had to look amazing right so that was kind of the bar was they knew it was different they knew it was scary it had to look amazing and toy story did that but the part that i thought was very thoughtful and i think very instructive for creators of all type authors in particular is they put so much effort into story and you know if i understand the pixar creative process you know the storyboarding the writing of the process they would sit around the table the executives and they would read the script and if there were not tears at the table it did not go forward right and so they were so adamant and disciplined and invested in the script that it made sure that the quality hit their mark now and you're right christian they have had some duds you know i don't know what the reason is but you know i would argue toy story 3 like it's hard not to cry at that and it's like what am i doing these are stuffed animals it's an animated thing and they they put it into context that it's so you're crying you're crying in a synthetic cartoon that runs on ai data centers with servers you look at the server made you cry it's a post-apocalyptic story about you know technology gone amok and the like right and that they were so powerful at the heartstrings they were so invested in the prescient, like Wally, so predictive of what was to come, right?

27:10About loneliness. They predicted the obesity epidemic. They predicted the smoothie run and all the different things that they got to, right? And that, I think Pixar is the right clarion call, is that authors embrace AI, publishers embrace AI, and make the core experience and transformation as great as possible. Raise the bar, grow the pie.

27:32Christopher Lochhead: Topic three. Let's go to Maysville, Kentucky. Population 8 ,700 people. A company offered Delcia Barr and her mother, Ida Huddleston,$26.8 million for their farmland. 48 ,000 an acre for 463 acres. 60 ,000 an acre for another 71. Roughly 10 times what the land would fetch on the open market. Land their family has farmed on since 1848. They said yes at first. Then they found out what was going on was a 2.2 gigawatt hyperscale data center. They changed their minds. The rest of the town signed agreements totaling$110 million payable if it gets built. The site would run past 2 ,000 acres bigger than two central parks.

28:18Christopher Lochhead: The company has promised 400 full-time jobs in a county with a working age population of$11 ,000, at least$15 million for police, fire, and ambulance, an estimated$80 million to fix a water system that averages one main break a month, and one in four people in this town lives below the poverty line. Median household income is about$39 ,000, less than half the national figure, and nobody in town has been allowed to know who the buyer is. Not the residents, not the neighbors selling their land, but public records point to Meta. The local development director who is to sell this thing is under an NDA that stops him from saying the name.

28:57Christopher Lochhead: So the town is now suing itself. Kentucky law required the opponents to sue their own neighbors to challenge the rezoning. A retired IT instructor ran for county commissioner on an anti-data center platform and lost by 75 votes out of 163 cast. Back in May, we covered 48 projects worth$156 billion getting blocked or delayed. This is what that number looks like from inside one town. So Christopher, time for the data center rent. All right. Heyo, let's go. First of all, people are conflating two things here. Local governments are allowed to and do every day make decisions about what to have in their communities and whatnot.

29:46Are we going to put an airport in? Are we going to expand the airport? Are we putting in a shopping mall? Are we getting rid of the shopping mall? Are we going to have manufacturing plants here? Are we going to have power plants here? Et cetera, et cetera, et cetera. And so all of the issues about putting in a major industrial installation, there's no different with the data centers. That's point A. Point B, and I won't get into it now, much of what we hear about the data centers, doom scenarios is bullshit. There's some reality, there's some power issues, there's some other issues. No question.

30:18I don't want to be silly about that, but most of it is pretty big bullshit. Okay. That's point A. Point B, these folks are allowed to decide to sell their property or not. This is America. If you don't want a data center, you don't want to sell to a data center, you don't have to. I don't have to sell my house to anybody. I can stay in my house. Or I can decide, I can decide this is America. I can take a lower offer from a friend of mine who I like than a higher offer from some person. This is America. So make whatever decisions that you want. Okay. But here's the stupidity of this. And let me just elucidate.

30:57Here's a recent post of mine on LinkedIn. I want to read it to you. How to organize a data center protest. One, pull out your smartphone. Two, connect to the internet. Three, Google data centers destroying America. Four, open laptop and start WhatsApp group. Five, create a Facebook group. Six, post on Instagram. Seven, make a TikTok. Eight, design stop data center signs at Canva. Nine, use ChatGPT to punch up the slogans. Ten, create a Google Doc to organize volunteers. Eleven, schedule everything in Google Calendar. Two, set up a Zoom meeting. Three, launch a GoFundMe to help pay for the protest.

31:3514, order the signs online. 15, track the shipment from your phone. 16, Venmo the guy buying the bullhorn. 17, Uber to the protest. 18, DoorDash lunch to the protest. 19, watch engagement roll in on the internet. And 20, use a QR code to collect donations at the protest. And when a reporter asks you why you're protesting, look directly into their internet connected cloud-based smartphone and say, we don't need any data centers. These people are insane. The governor of Illinois, Josh Shapiro, used the internet to promote that he's stopping data centers that run on the internet. And I've been into this over the last couple of days on LinkedIn.

32:26Man, there are dumb people. And they go, well, no, no, I'm not the bad person because my use of Netflix and of Amazon and of fill in the blank, all the things I just mentioned, they don't use AI data centers. They just use data centers. Okay. Is there a difference between a cloud data center and an AI data center? Yes, there are. But guess what? Here's what makes you dumb if you have that opinion. almost every piece of tech that you use today has ai embedded in it and so when you use doordash and you schedule an uber etc etc etc those products use ai so when you use those products you are increasing demand for ai compute so you are being a a donkey and frankly you're being a radical hypocrite when you say no data centers and you're posting online about how much you hate data centers.

33:26This is one where I agree and disagree with my brother Christopher on this one. He gave you the vinegar part of the argument of like, hey, there's a lot of illogic and hypocrisy and contradiction in here. Let me give you the honey part of the story, which is, I mean, it's not, I agree with everything that Christopher said. And what I took away from the article was it wasn't what they were doing, it's how they did it. My suspicion is maybe the outcome would have been the same, but had they done it openly without the veil of secrecy, they might have gotten a different response. So when I read the article, what I saw was the gag clause, not the gigawatts, were the issue, right?

34:01They were told, don't talk to your neighbors about what we were talking about. Why is that the case, right? Meta is ostensibly the buyer ultimately behind this data center in the middle of the country, right? is that they don't want the neighbors to kind of bid up the price. I get that. There's a logical reason why, but when you have gag clauses, that's kind of one, right? Two, when people were asking, who was the buyer? They're like, I can't tell you that. So they had to play 20 questions with them. Like, is the buyer a US base? Was it an A-rated stock is what they said? And one lady, when she figures out that it was meta, she was like, well, I owe 200 shares of meta.

34:41And if I saw Mark Zuckerberg, I would kick him in the shins. Like, I don't know what the make of all of that is like, I'm an investor and I don't like him. But also, this is an issue when you have NDAs, ag clauses and everything else. The hypocrisy is all there. I am putting the blame squarely at the feet of the tech company of like, if you do things in secrecy, people will make up stories about it. And it's your own darn fault that you did this this way, right? When you can say, you know, I can't legally name who I'm working for and it would void the contract. Like, you got to walk into this open kimono.

35:17To me, this is about, if it's meta, buying it on the cheap, buying it for their purposes, buying it in a mercenary way. Had they gone to the town and said, we want to do this, we want to do it not to you, with you. Let's hear your concerns. Let's talk about this. I would say that when I looked at, this is a non sequitur, but Mark Benioff's response to the Hurricane Lala and the Big Island versus silence from everybody else told me everything. He knew Pahala, the specific area of the Southeast region that was massively affected by the hurricane. He posted videos. He said, we're with you. There are 2 ,000 people that, and he's helping in a way that I think if Benioff was buying land in this part, I just think it would go differently.

35:58I think more open, more with them versus to them. And in a way that said, hey, what are your concerns? And you know what? We can give it to you in a higher price point. Or, you know, you don't tell a kid, do you want vegetables? Yes or no. You want peas, carrots, broccoli, right? I can give you a higher price point for your land. And, or I could give you a lower price point and we could put in a power plant that will reduce the power here. We can put in a park. We can put in city improvements. We can do X, Y, and Z to make the pie bigger and elevated for everyone. And that when I look at this, like at the end of the day, there's two things about this that matter, right?

36:33It's the how you do it, not what you do. And the second part is that the part that was really kind of eye-opening to me was the amount of, it's not rational, it's emotional, and it sometimes is a religious element to this. The women in the article are like, you know, Jesus told me to haul the land, I'm not going to sell the land. And I don't know what you do about that. And you have Dario believing that he and the other people at Anthropik are creating God. So you have these two impossible forces, like both religious in their sense of like, We are Prometheus bringing fire to all of you noobs and therefore do what I say and how dare you question the manner in which I do it.

37:14And the people who are like, I'm not gonna sell to you because I believe this is my God-given right to own this land. I'm not gonna do it, even if it's against my best interest. We cannot logic our way out of a religious fight. The only way to do it is through relationship. You have to do it openly. You have to do it in a win-win manner and you have to do it in a way that, again, starts with relationship capital not leads with financial capital. And so I agree with you completely. I was speaking kind of overall, not to the specific of this. I'll go even further. The AI category leaders get an F.

37:51The government gets an F. The politicians get an F. This is the greatest new value creating technology ever invented by humans. There's no question about that. It's very clear. And half of the country is freaked out. And Zuckerberg has a long history of doing things in secret that we don't know about that freak us out. He is not, most consumers don't think Facebook is trustworthy. I got into a fight at a dinner party that almost led to fisticuffs with the CTO of Facebook. He was sitting right next to me. And this guy, he's very well known in Silicon Valley, is trying to tell me that they have great PR and everybody loves them.

38:35And I said, dude, I don't know what you're smoking over there, but the world is skeptical of you big time. And for damn good reason. Yeah, it was quite the evening. I never got invited back to that party. And so look, these people are terrible. And Meta is incredibly, for smart people, they're incredibly stupid because here's the other thing Meta is doing right now. Meta, so in the tech world, the governments are failing and they're failing a number of things that tech companies need. A big one is workers. So to build data centers, what do they need? They need carpenters and plumbers and engineers and et cetera, et cetera.

39:17Well, the community colleges aren't producing them. So what did Meta do? They set up their own and they will train you for free to become an electrician and guarantee you a job if you graduate. They're giving you free education. Remember, we wanted free education. Remember, free education, no student loans. They're giving it for high paying, high value IRL jobs to build data centers that they're guaranteeing. So think about it. If they'd rolled into this area and said, this is who we are, this is what we want to do, and these are all the things we're going to do for the community, they would have been treated incredibly.

40:04Instead, they did all this donkey secret bullshit and freaked everybody out and they got what they deserved. Well, I think the good news is Tyler McHugh, I think he cited in the article, I guess he's the region's economic development, director for Maysville. His assessment is there are 20 % that are adamantly opposed to this, 20 % that are adamantly for it. They want the money, they want the upside, you know, all the good Scooby snacks that come with it. 60 % are in the middle, just like any other divisive issue in the country, right? You can move the middle. If people were smart, they would hire Christopher to be the prime minister of AI marketing and be the CMO of the category and help people explain not only the benefits, but in a way to do it, to your point, Christopher, if Meta was doing the University of Kentucky scholarship, tuition scholarship for electrical engineering and this and that, that would go a long way.

40:56If Meta sponsored the trade school scholarship for construction and this and that, that would go a long way. If they created a 401k and invest America-like thing, like literally Brad Gershner's thing, sitting right there. You walk in with five grand for every baby, you'd be done. If they built a new daycare center, a new elementary school, middle school, and high school in town, what do you think would happen? It's not that hard. It's not that hard. And so some of the, look, you know, I argue for many of these legendary entrepreneurs who are billionaires. But when they do dupid things, yeah. I was up late last night doing dupid things.

41:41Um, they deserve what they get and they fucked up. They really did. And it would have been so easy. Be a good person in the world. And the irony is they're already trying to do it.

41:53Christopher Lochhead: We'll see you next time, pirates.