Bullish or Bearish: The Great Debate

0:26Race the rudders! Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. On today's pod, it's Indigenous Peoples Day, and we have a special episode for you. Special indeed. We're testing out a fun new format called Bullish or Bearish. It's Monday, October 9th. Let's ride.

0:51So we teased it a little bit, but here is what the format of the show is today. We've come up with eight big picture topics for Neil and I to debate. Some we chose ourselves and some we sourced from your suggestions, so thank you for those emails. For each topic, Neil and I will adopt a stance. Are we bullish, aka optimistic, or bearish, aka pessimistic, and then do our best to defend the position we take? Neil, may the best debater win, I guess? I have been preparing for this for my entire life. These topics are really juicy, probably too juicy, but it's going to be fun. I can't wait to beat you.

1:25I'm excited and also a little nervous, but let's dive into our first topic. Up first, are you bullish or bearish on the four-day work week becoming the norm for corporate life in America? I'm going to say I'm bullish on this happening because in high-income countries, annual working hours per employee has been cut in half between 1870 and today. So let's take Germany, for example. Annual working hours there were in 1870, we're at 3 ,200. And in 2017, it's now 1 ,300. So that's a 60 % decline. In the 19th century, people worked as many hours between January and July as we do for an entire year nowadays.

2:07So I don't see any reason why in 2023, with all of our productivity growth, all of our technological innovation, why there be any reason for this long precipitous decline that's been going on for 150 years to stop now and eventually you know you work a few hours to the point where it's just four days i do think that leading with that stat probably wasn't the way to go because starting the 1800s is a much different so obviously i am veraged on this topic it's a much different world than a more modern society and so if we go back to just like the 1930s when john maynard canes was the popular economist was at the height of his powers.

2:43He said that his grandkids would have a 15-hour work week because of similar arguments you made. There's going to be increases in productivity. But what Keens kind of forgot is that work is less a product of technology and more a product of culture. So the current culture, the current world that we live in, is one where work has become part of kind of that Maslow's hierarchy of needs. We derive a lot of our community and a lot of our self-actualization from working with people. Like this pod gives our, I don't want to say it gives our life meaning, but it does to a certain extent. And so all these productivity kind of forecasts ignore the cultural impact work has in our life.

3:21So I don't think that the advancements in AI are going to suddenly cut our work week in half and that we're all going to stop going to work and just have all this leisure time because of the place culturally that work occupies. I think a lot of people, as the pandemic showed, would be more than happy to not have work be a central part of their life. And over the past few years, we've seen a lot of people rebalance their work and life and focus more on life and less on work. So if you have employers saying we're going to offer a four-day work week because, you know, we think you're more productive because you're all using ChatGPT now, then I think everyone would happily accept that and no longer have work be a part of the culture.

4:01I mean, Henry Ford was the person who instituted the five-day work week back in the 1920s because of pressure from the United Auto Workers Union of all groups. And they're currently on strike. And one of the reasons that he did that is not total benevolence is because those two days over the weekend allowed the workers to spend and, you know, throw their cash around the economy and spend on leisure and whatever the equivalent of Taylor Swift tickets was in the 1920s. So there might be economic incentive to give people, if they're making as much money, more days off so they can go spend it on travel and other leisure and recreation activities.

4:37All right. Let's reach a compromise. Four and a half day work week. That's where we're going to land. If someone dangles a four day work week for you, you would reject that? I would reject it. You say, that's such a part of my identity. The people need the pod on Fridays, Neil. OK. All right. So we'll do the pod and then we go golf. Yeah, exactly. Four and a half day work week. All right, let's move on to our next topic. Neil, are you bullish or bearish on plant-based meats capturing a larger market share in the coming years? Look, I know that plant-based meat is in the trough of disillusionment right now as far as this hype cycle is concerned.

5:08It was so big in 2018 and 2019. Everyone thought it was going to be the future of protein. And now companies like Beyond Meat and Impossible Foods are in the dumps. They're laying off staff and their stock prices have plummeted. But I think it's going to come back. I think I'm bullish on plant based meat. I mean, we're in the early days of I just think what is a major shift away from meat in general. Beef consumption is declining everywhere. I think a lot of people are becoming aware of the climate impacts, the ethical dilemmas that go with factory farming. So I think, you know, plant based meat is in a good position to capture it.

5:46I think they have to get costs down. There's a lot of stuff they need to do to improve. But I just think this is the first wave of innovation that's coming. And there's going to be plenty of others that come behind it to lower costs, make it more palatable to consumers, make it taste better. But I do think this is the way the world is moving. So I think plant-based meat has a bright future. I mean, you kind of glossed over just how bad plant-based meat has performed in the markets. I mean, it's down beyond meat, which is the biggest plant-based meat stock out there. It is down 75 % this year. It's currently trading at around a$500 million market cap.

6:17that's down from a peak of 12 billion dollars so that trough of disillusionment that you mentioned is much deeper so you remember the dot-com bubble right you don't go to anywhere that has a dot-com nowadays we're in the marinara oh no i have the trench whatever the trench is called uh marianas or something marian i almost said marinara trench but yes that trough is deep but i also just think they made a strategically unwise decision with the way they framed plant based meat right from the get-go remember one of the big things that they always would would talk about is that it bleeds. It looks like meat.

6:48It handles like meat. And I think while that was a cool novelty in the beginning of plant-based meat coming out, I actually think that alienated a lot of potentially like vegan and vegetarian customers because they're not actually looking for that. And then meat eaters also aren't necessarily looking for their fake meat to bleed because one of the big things about a lot of meat eaters is that they view it as a vice food. So when you go out to a nice steak dinner, it tastes really good. You spend a lot of money on it. And it's one of those treats. Plant-based meat is never going to get there because it's just one of those foods that doesn't quite taste right.

7:21It's never going to reach that level of vice status. And so it's not really appealing to either subset of the population. So I just think they made a strategic error with that whole like blood thing. I'm just following the money. And Nestle is the largest food company in the world. And they're devoting 10 % of their entire R &D budget to plant-based foods. And one of the executives there said that they believe that this plant-based protein market is going to eventually account for 30 to 40 percent of the entire protein market in the world. And these are this person literally's job is to do this.

7:53And they have tens of billions of dollars flowing into R &D and development here. Their literal future is staking on what happens in the future of protein. So I'm going with them. Nestle's never been wrong before. But the one thing I will say, the last thing on this topic is lab growing meat, which is a little bit different because that actually is meat. I am bullish on that just because I think we're going to be able to create almost a better protein, a more tender chicken, a more tender, because you can remove all the impurities. So while plant-based meat, I'm not bullish on lab-grown meats, I am.

8:25I'm also bullish on lab-grown meat. We agree. Let's go. All right. Our next topic is very similarly super light. It is global population decline. Elon Musk and some demographers are warning of an existential threat to the human species because birth rates are declining everywhere. Populations are aging. And if this keeps up, we'll be left with just zero people on this planet. Other experts have pushed back saying this is not a problem. Toby, are you bullish or bearish on this being an actual problem? I am bearish on it, meaning I don't think it's as big of a problem as a lot of people are making out to be.

9:00I think it's an overly pessimistic line of thinking. I mean, if we go back to the 1968 book that we all know, Population Bomb. That book forecasted a 20th century starvation catastrophe, but obviously that hasn't come to pass because technological advances have met increased need and worldwide people have started to have less kids. And so factor in our ability to meet the needs of a growing population and the fact that a shrinking population can lead to some good outcomes like lower emissions, increased per capita income, increased gender your equality. And I don't think that this is truly the existential issue that a lot of people claim it to be.

9:36Okay. I mean, I disagree. I think it's a fairly big problem to have smaller populations, especially ones that there are a lot of older people in your countries. We're seeing this in Japan. Actually, all around the world, there's low fertility rates. People are having fewer babies. And this creates a huge burden on younger people to work longer. I'm not saying work more hours per day, but work longer in their life. And that is an issue that countries are reckoning with right now. Remember what happened in France this year? So a lot happened, a lot happened in France this year. I'm not talking about the bedbugs, but I'm talking about when French president Emmanuel Macron had to increase the retirement age from 62 to 64 because the pension fund was being depleted as their population gets older.

10:23And that sets off, that off months and months and months of riots and protests. So that like we're seeing the effects of population decline, aging populations come to the fore in 2023. And the UN projects that within 100 years, our global population will reach its peak and steadily go down. And I think that has like numerous economic knockoff effects that we're only beginning to confront. One other detail on this is that the science of population estimation is actually pretty wishy-washy because it's very hard to estimate how many people there truly are in the world. And when the UN said that we passed 8 billion people back in 2020, that was mainly just a ceremonial thing or like a PR stunt because we may have passed it 10 years ago.

11:08We may be passing it 10 years in the future. So whenever there's such a wide degree of kind of variance and uncertainty in these population models, I just don't trust that even that model is something that we truly have to be worried about because it's kind of like, I don't know, estimations in the solar system where they do it in plus or minus 100 million light year type deals. So again, even though the trend is heading upwards and we are probably going to reach peak population at some point, I don't think it's as pressing an issue as, I mean, Elon Musk is kind of staking his claim on it being the biggest issue we're facing and I don't see it that way.

11:43Okay. All right, let's move on. Our next question is a big one. Do you think one individual person will reach a$1 trillion net worth in our lifetime, Neil? And who will it be? And who will it be? All right. So I do think so because growth is, I mean, look at the stock prices, look at economic growth, look at inflation. I think eventually there will be a$1 trillion person. And I think that person's going to be Jensen Huang, who is the co-founder and CEO of NVIDIA. NVIDIA, I'm sorry. That's the company that makes the powerful chips called graphics processing units that are powering the AI boom. He owns 3 % of NVIDIA.

12:21The company is a rocket ship. The stock is up more than 200 % this year. It's over$1 trillion in market cap. In the recent Forbes 400 list of richest Americans, he gained the most of anyone on the list in percentage terms. He is worth$40 billion right now, so he has a long way to go. But when you factor in potential stock price growth of Nvidia and all this stock-based compensation he's going to get, and he owns 3%. I'm just, if anyone's going to do it, I think it could potentially be him. Elon seems too reckless with his money. He just lit$44 billion on fire. Bezos and Zuck have companies, I think, whose growth trajectories are slowing down.

12:58Tim Cook is only worth$2 billion. He's not a founder of Apple. And I was going to say Sam Altman. He was the CEO of OpenAI, but he doesn't have any equity in open AI. So process of elimination, I just came back to Jensen. Jensen, wait, so he owns 3 % of NVIDIA. Yeah. How big would NVIDIA have to be for him to become? Let's just do that math, Neil. Well, it's not just that because he'll get awards as it goes on. I mean, Elon Musk got $60 billion worth of stock-based compensation that wasn't tied to his actual equity and the company's actual ownership. It was kind of this bonus thrown on. So I don't know, over the course of our lifetimes.

13:32I hope we live to 100 years old, which is another 70 years. That's my biggest pushback on this. I am embarrassed, especially on Jensen, because I knew you would say that. And it's because I don't think one person is going to become a trillionaire off of a single company. It's going to be someone like Elon Musk who has multiple home runs, not even just multiple companies, multiple giant home run companies. And Elon's the closest we have right now. And Tesla, even if Tesla was just the one that pushed them to a trillion dollars, it would have to 10x over the next 10 years or over the course of our lifetime.

14:09Or even like, let's say SpaceX succeeds beyond our wireless dreams. It would have to become a trillion dollar company as well. Neuralink would have to become a trillion dollar company. Once you start piecing together just how much, how big these companies would actually have to become in order seven to hit that trillion dollar mark i just don't see it happening especially not one single company powering yeah elon's closest right now he's worth 250 billion dollars so he's a quarter of the way there maybe it'll be somebody like mbs you know who just seizes all the assets of his country and right is b is worth a trillion dollars by himself because he's just an autocrat the one thing that i did say like maybe we're just we're going back and forth debating this and there's already a trillionaire over in kind of a oil producing state who just owns way more than we know about.

14:54So the oil money is the wild card here for sure. Okay. We are going to take a little halftime break from the debate because I just want to talk about what bullish or bearish means. Like where did those terms originate and how do they make their way to Wall Street? So I went to Merriam Webster and it said the term bearish, the pessimistic one came first. That term traces its origins to a proverb warning that it's not wise to sell the bear skin before one has caught the bear. So the term bear skin and later just bear to describe someone who expected stock prices to fall was popularized during England's famous South Sea bubble scandal in the early 18th century that you might remember from history class.

15:37It seems that the bull imagery came about later as the appropriate alter ego to the bear. And those animals have just remained in the financial vocabulary today. That's a fun and probably the more correct definition, but I was also doing some digging as well. And another theory for why we chose these animals is it comes down to how they attack something. So when a bull is attacking something, it will charge towards the target and thrust its horns up into the air. Stocks go up, you're bullish on the market. But then when a bear attacks something, it usually swipes down with its claws. So even though that's probably just totally not true.

16:12I love that theory because it actually does, if you are someone newer to the stock market, it's a way to remember which side bullish and bearish it is. Bear swipe down, bulls thrust upwards. Okay. Wow. I don't know what to say about that. It's definitely not true. Okay. Let's head into our next topic. The state of higher education. Many words have been written about the future of college and the value of a degree, especially with tuition costs soaring. tens of millions of Americans saddled with student debt. Toby, are you bullish or bearish on higher education in the United States as we know of it today?

16:43I am bearish on higher ed because America is getting more and more bearish on higher ed. So surveys from Gallup found that the percentage of young adults who said that a college degree is very important fell to 41 % from 74 % just 10 years ago. And only about a third of Americans now say that they have a lot of confidence in higher ed. Among Gen Z, 45 % say that a high school diploma is all you need to ensure financial security. And now almost half of American parents say they prefer that their children not enroll in a four-year college. So if we have a drop in demand, I also think that we'll have more colleges start to struggle to make ends meet.

17:21So about 95 % of colleges rely on tuition to operate. And if enrollment starts to decline, which those stats are pointing to, we're going going to see more and more shuttered institutions already since 2016, 91 colleges have closed. And so while yes, colleges with fat endowments and big brand names, kind of like the Ivy League, will probably do okay and still attract elite talent. That long tail of universities is going to struggle mightily. All right. So you cited poll numbers. I've got real numbers here. I've got Application numbers. So for the 2023-2024 school year, there were 1.2 million applications to 841 colleges in the Common app.

18:03That's an increase of 21 % over 2019 and 2020. And the total number of applications increased by 30%. So no matter what Gen Z or people are saying, they're applying to college more than ever. The pandemic was this opportunity for a reset for many institutions that we know of in life. I mean, we all went home from the office and we all decided the office wasn't working. So only 50 percent of people have come back to the office. I think there was that similar opportunity for college when everyone went home. And if there wasn't any value in college, many students would have just said, this isn't working for me.

18:37I'll just stick with online education or I'll just go apply for a job and I don't need a degree or I'll just go with, you know, a vocational school. But the power of college has removed remarkably resilient because it is the key to higher incomes in today's economy. So I think it's sticking around. I just think the financial burden, though, is becoming so and so great. The cost of higher ed has just ballooned over the last decade alone. And just everything is more expensive. And so while, yes, again, the top 1 % of students will still filter towards college, I do think these lower institutions are going to suffer because they're raising prices at the same rate as an Ivy League is, but without the brand name recognition.

19:20And so I just don't see how we can support economically the middle class of college institutions, which is what the vast majority of people go to. So I just see the power laws of the internet kind of taking effect and the Harvard's of the world getting even more powerful while the rest of the country kind of falls to the wayside a little bit. All right, Neil, our next topic for debate is San Francisco, just the whole city. Are you bullish or bearish on it over the next decade? Just like Plant Based News we talked about at the beginning of the show, San Francisco is not in a great place right now.

19:54And yet I am bullish because of this one reason. It is still the top place for VC-fueled startup innovation, not just in the U.S., but in the world. That is the San Francisco Bay Area by a massive margin. No one else comes close. According to CB Insights, 335 startups are currently working on generative AI and$12 billion have been invested across all of those startups. Half of all of them are working in San Francisco. So I think this this city remains the center of the tech universe by leaps and bounds. Don't worry about Miami. Don't worry about Austin. Those are just small fish compared to San Francisco.

20:30The center of gravity there is so big. The smartest people in tech are always going to want to work there. The agglomeration economies there are so big. You can't work virtually. You have to meet face-to-face for huge startup rounds of$100 million and$200 million. So for that reason, I don't think San Francisco can stay down for long. There have been a lot of policy issues and self-owns that it's done in the past few years, but it has too many assets. I just think that the world is not just VC funding, and I know that's what San Francisco is mostly known for. But like, let's look at the definition of a doom loop for a city and see how it compares to San Francisco.

21:07So an urban doom loop is kind of this self-fulfilling cycle that goes like this. Workers vacate a city because maybe remote work has caught on or other alternatives have pushed them out. Residents began moving to the suburbs. So then retail business start closing due to lack of customers. City tax revenue begins to climb because there are less people to pay those taxes. And so the city responds by cutting some services, raising other taxes, which drives even more people and more money away from the cities, so on and so forth. That's a doom loop. Let's look at what's happening in San Francisco right now.

21:39Cell phone traffic in downtown San Francisco is still at just 32 % of pre-pandemic levels. So there's no one really walking around the cities, which has caused the retailers to leave Nordstrom, Uniqlo, Gap, Saxon 5th, H &M. I could literally go on forever. I have all left downtown San Francisco in the last two years alone. And then the city's tax revenue also fell by$484 million in 2021. So that's got Doomloop written all over it. And no amount of VC funding or AI startups can actually escape this real Doomloop cycle that we're seeing play out in real time. So I could not be more out on San Francisco.

22:14Wow. All right. San Francisco, you can't ever go there after saying that, first of all. Which I do think it's a lovely city. No, I think that the leaders there are going to have to make some tough decisions and work on making more housing in downtown to create a more livable city where people are there 24 seven instead of just commuting in and then going back to their residential neighborhoods. You have to put more mixed use downtown and have people live there. That's been sort of this strategy that a lot of cities have used to great effect. And San Francisco needs to do that. And it has really terrible housing policy.

22:45That cell phone stat, though, that blows my 32 percent of pre-pandemic levels. That does not seem like it. Well, your cell phone's never getting in there. I know, seriously. Moving on to our second to last topic, just about every industry is trying to incorporate AI into their products. One of them is online dating. Industry leader Match Group and other startups are launching new features and apps to automate everything from picture selection to pickup lines. Toby, are you bullish or bearish on AI-infused dating apps? I'm so bearish. I'm so out on this. And it comes down to one word, and that is spam and bot accounts.

23:18I guess that's more than one word. But imagine this now. You can set up a portfolio with, one, a fake AI picture, two, a fake AI written bio, and then three, have AI send fake AI-generated messages for you. So if platforms like Tinder aren't careful, they're going to destroy their entire apps just by introducing AI into the fold. Because as soon as that user experiment starts to tank a little bit because you see all these bot accounts, another doom loop starts, honestly, and people start leaving the app. So I just think the spam problem is something that these apps haven't really considered, and it's going to be a problem.

23:51It's definitely a problem, but overall, I am bullish because of one word, burnout. As someone who's on the apps right now, all you want, I promise you, is to make your life easier and to automate anything you can because it is a time suck. It is like applying to another job. In a recent survey, nearly 80 % of users of dating apps said they experience emotional burnout or fatigue with online dating. and on Hinge there's this prompt with the question what are you most excited about for the coming year? The top answer I see is deleting this app. People are so fed up with it so if there are AI tools, light touch AI tools I don't need heavy handed things like creating my entire profile and writing everything and sending messages because I do I'm not in on bots talking to each other the actual dialogue, I think that's dumb but simple light touch help automations like choose the best three profile pictures from my library so I don't have to scroll through every single one of the pictures I've took for, you know, optimize that.