Big Tech’s AI Vibe Shift

15:13Scott Galloway:ed yeah we should talk about tesla i mean just before we move on to tesla i would just add one caveat, which is that Meta is spending like crazy on AI. I mean, that CapEx was unbelievable. But I think that to your point, what investors want to see is like, show us that you have leveraged AI, show us that there's real money coming in. Meta was able to do that, which gives them the option to go out and spend like crazy. That could reverse, you know, on a dime. And we've seen this continue to happen over the past year. I think what we're increasingly seeing in the AI Wars is this is a war of vibes, a narrative.

15:49Scott Galloway:This is all about like, does the market generally agree that you know what you're doing with AI? And are you associating with the right people? Last year, associations with open AI was a vibe to the upside. Now it's reversed. It's a vibe to the downside. I think it's highly possible that vibe could keep whipsawing back and forth. But there is no question the vibe is massively important to valuations right now. It's literally moving hundreds of billions of dollars at a time.

16:17Ed Elson:Well, just to use an acronym here, ROI, right? It's all about ROI to some extent. And there's a raft of new unicorns, and it's an exciting part of the economy, and we got to give AI its credit. It's created an ecosystem of companies that put a thick layer of innovation on top of inference and then sell into niche products and services into specific sectors. And they're basically free riding off of the massive I, right? And they get a big return because they can free ride and have small I themselves, which makes the R-I bigger. And then there's companies that are huge on the I, but it's not entirely clear what the R is.

16:57Ed Elson:I would put open AI in that bucket. It's very hard to figure out how all of the spending and these trillion dollar commitments, where the R is going to be big enough. But the sweet spot is companies that have huge R and huge I because they're seen as pulling away from everybody else, but also are showing the massive kind of return. And right now that's meta. Huge CapEx can make that CapEx so they can pull ahead of. Pinterest didn't lay off people because of AI efficiency. It laid off people because it can't compete with a company like meta. And in addition, it's showing huge R's. So the sweet spot that creates, you know, what might be the most valuable company in the world at some point is enormous R and enormous I, so to speak.

17:40Ed Elson:Tesla?

17:41Scott Galloway:Tesla.

17:42Ed Elson:Tesla? Oh, my gosh. I love that he's trying to distract. Talk about weapons of mass distraction on the earnings call. I don't know if you saw this. Musk updated investors on Tesla's new mission, which is, open quote, to build a world of amazing abundance. And we're going to build a world of amazing abundance. I would translate that into an abundance of ketamine before the earnings call. He also focused on Tesla's humanoid robot product, Optimus. Sales of the robot are expected to begin in 2027. Musk mentioned Optimus 28 times on the earnings call. I'm shocked he didn't threaten to bomb Iran at this point to distract from the fact that the Cybertruck is a total fucking disaster and revenues were actually down.

18:31Ed Elson:Automotive revenues declined 10 % year on year. and their pre-tax profit margins in 2025 were about 6 % less than half as much as Toyota's. And just to give you a sense for what is, I would say, with the exception of Palantir, the most overvalued company in the world, Tesla trades now at 400 times earnings. Toyota, which in my view is the best managed automotive company in the world, trades at 10 times earnings. Your thoughts, Ed?

18:58Scott Galloway:I would love to know if there have been companies in history, and I would go with large cap companies in history, that have traded at near 400 times earnings, and yet their revenue has been in decline for not just multiple quarters, but getting on to multiple years now. I mean, that is just unbelievable. The fact that revenue, the stock actually jumped in after hours. Then it came down. People seem to kind of, I guess, come to their senses a little bit. But revenue was down 3 % year over year. And yet this is the company of the future. It's a declining business. It's a declining business trading at 400 times earnings.

19:38Scott Galloway:And we can just go through more of the statistics. I mean, there's no question. This was a horrific year for Tesla. Operating margins down, everything.

19:45Ed Elson:Yes.

19:45Scott Galloway:Free cash flow down 30 % year over year. Net income down 61 % year over year. Also, a lot of the reason why they're staying afloat is because of these regulatory credits. where they registered half a billion dollars because of these regulatory credits. Without them, profit would have fallen another 65%. And of course, the big, beautiful bill is going to get rid of those regulatory credits going forward. But the genius, and I mean, you call his bluff and so do I, and I think so do many investors. But the market seems to believe it. The genius is Elon has been able to just launder in a new future growth project every few years to keep the multiple afloat.

20:29Scott Galloway:He's not keeping this business or this valuation up through fundamentals. He's decided he doesn't even care about that. The car sales are done, whatever. But he's laundering in his next project, which is The Optimist, which as you say, he mentioned 28 times on the earnings call. He said he's going to stop producing the Model S and the Model X because he's going to increase the production capacity for these humanoid robots. So that's one piece. And then there are these rumors out, or at least Bloomberg has been reporting this, that he's considering merging Tesla with SpaceX and also merging Tesla with XAI and also investing, having Tesla invest$2 billion into XAI.

21:09Scott Galloway:So then the stock goes up again on that news. So this guy is just like a magician of, I guess, brand laundering, would be perhaps or maybe multiple laundering, valuation laundering. I'm not sure what exactly what it is, but it's working because somehow this business is in decline and yet the markets are saying, yeah, it's okay. We've got the robots coming later. We've got the AI coming later. It'll be fine.

21:37Ed Elson:I think he's going to attach every anchor to the ship here that is SpaceX. I think he's going to roll it all up into one kind of AI story about space, communications, connectivity, self-driving cars, robots, and talk about a world of abundance where you can get to where you need to be faster, communicate with people faster, new ideas, new communication, new means of self-expression, unlimited abundance. I think it's going to turn into this giant kind of tomorrow belongs to me narrative with all these, granted, amazing products and companies and the ones that aren't working, he'll roll up into the ones that are working.

22:21Ed Elson:But I think this has been his plan all along. You're right, it's a ton of jazz hands. It's trying to sell the narrative over the numbers and constantly get people to look away from the numbers. So they're focused on the narrative. And also, the narrative is very exciting. Space, launch capabilities, you know, huge communications platform, self-driving cars, electric, EVs. I mean, it's like every eight-year-old's dream. is this company. You know, every eight-year-old boy's dream is this company. And then never lets the company settle in enough to let analysts say, okay, this is what this company is.

22:58Ed Elson:And this is the multiple it should be trading at or the range of the multiple it should be trading at.

23:02Scott Galloway:I think it's so true that there's a benefit to having analysts and commentators and investors and observers just arguing over what actually is the company. Yeah, just whipsaw it around. Yeah. And it gives it this air of like, it's so mysterious. We don't even know what it is. How do you even define it? You can't even pin it down.

23:21Ed Elson:You just described Palantir.

23:22Scott Galloway:Exactly. Palantir as well. And it's like, it's almost as if that's what you need to do as a CEO these days. If you want to get that extraordinary multiple, you have to just sort of obfuscate around this. You can't define what our company does. Our company does so many different things. We're doing all these things out in the future. You don't even know what we're doing. and then we all quibble in the comments about what is tesla is it a car company is it not a car company and ultimately i think it translates to an extraordinary multiple i find it ridiculous but i mean i guess give the guy credit because it's working he's selling that narrative and it's working well we'll be right back after the break and if you're enjoying the show so far send it to a friend and please follow us if you haven't already

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27:13Scott Galloway:We're back with ProfG Markets. We talk about Apple, not that much interesting here. Stock is up a little bit, around 1%. Better than expected earnings. Revenue was up 16%, which is pretty impressive. Beat on EPS. I think one analysis that we found kind of interesting that says something about Apple. I'm not particularly bullish on Apple, as you probably know. But this was an analysis from Sherwood. they got this data from the Consumer Intelligence Research Report, which found that people aren't buying iPhones for the new features of the iPhone. In fact, that number is only 14%. Everyone is buying an iPhone either because their iPhone is old or because their iPhone is lost or it's broken.

28:08Scott Galloway:And they lay out these numbers. It translates to around 70 % of new iPhone purchases are for one of those two reasons. And for me, I mean, I think Apple has gotten so entrenched in our society as a product that the iPhone has at least. And it is impressive that they are growing sales. But in the long term, I don't think it's very exciting what they're doing. I think the market's response kind of reflects that. It's like, yep, you did well. You're doing things right. Congrats. And we're going to reward you with, you know, a 1 % bump in the stock. I'm not going to give you a super extraordinary multiple right now, but, you know, things are going well.

28:45Scott Galloway:I mean, it seems that Apple is more and more becoming a legacy tech company. And it seems to be reflected in the numbers and also in the way they're handling the business. But any reactions from you?

28:59Ed Elson:I think you're being a little unfair. I was actually shocked that they grew their revenues 16%. I mean, that's on a company of this revenue base, 16 % is real.

29:09Scott Galloway:Yeah.

29:09Ed Elson:And it's actually its fastest quarterly growth in more than four years. So it looks like growth has kind of revved up again. And its earnings per share increased 19%. I mean, that's an incredible quarter for a company this size. And that's despite a pretty lackluster AI story. The growth came from, as you mentioned, better than expected iPhone sales and record services revenues, which have greater margins in hardware. um so i was i would say the top line number surprised me more than any other company 16 on this company is i mean basically they grew this company you know kind of like the the size of procter and gamble in one quarter i mean it's just uh 16 i mean let me put it this way tim cook would love to repeat this quarter over and over and it just shocked me because i i always get the new iPhone, more is signaling than anything else.

30:04Ed Elson:It's just automatic for me to have the newest iPhone. But I don't really sense any difference. As a matter of fact, I think the operating system is a little bit confusing. I think it's sort of a step backwards. They say the camera's better, but at some point, you know, the last camera seemed pretty incredible. But they grew their revenue 16 % top line. I just, I was, quite frankly, I was really shocked to the upside by their revenue growth.

30:27Scott Galloway:Yeah, I think that the 16%, I think that's a totally fair point. The 16 % revenue growth is very impressive and it's because people are buying the iphone and you know i think that that is a testament to their marketing capabilities um i don't think it's a testament to the product itself i think that is my point the thing that you're saying there about the iphone itself i mean i got the new iphone the reason i got it was because my old iphone was the battery was kind of dying and i figured okay like i guess i should get the new iphone and it's time for an upgrade um but i'm not impressed by the new iphone i'm not impressed by the product that's what i'm hearing from most people i don't think anyone's really impressed by the operating system and the growth potential of ai is not really there he was asked about how they're going to monetize ai tim cook was on the call and he didn't really have an answer to that so i i think i think that's true i think it is impressive the sales growth of the iphone but i just don't view it as that sustainable going forward because I just don't, I don't see them introducing new products that people are really excited about.

31:36Scott Galloway:But, you know, perhaps I'm being, perhaps I am being too harsh on Apple. Perhaps I'm upset with Tim for going on the Melania show.

31:44Ed Elson:I think Apple is going to basically, essentially create an enormous new licensing agreement with one of these LLMs that's raising ridiculous amounts of capital to be the AI LLM of choice to their billion wealthiest consumers in the world. I think they're doing the same thing. I think they're going to stay out of the AI wars and leverage their custody of the billion most important consumers in the world and enter into some sort of similar agreement as they have with search. You know, they never got into the search wars. They said, we can't compete. It's better to rent our consumer base than go vertical in this.

32:24Ed Elson:I think they're doing the same thing in AI. So anyway, we'll see.

32:56Scott Galloway:and he will never let you down. We finally got our Fed chair. People thought it was going to be Kevin Hassett. People thought it might be Chris Waller. Then people thought it might be Rick Reader. It is going to be Kevin Walsh. My initial reactions to this, the options were not that great. At least if you were to look at Kevin Walsh versus Kevin Hassett versus Chris Waller, I don't know as much about Rick Reader because he came onto the scene very late. But what I do know is that, in my opinion at least, Kevin Walsh is the least bad of the options. You know, he's definitely been a sycophant of late, but he could not have been more sycophantic than Hassett has been, and also than Waller has been.

33:43Scott Galloway:And what is also quite interesting is, you know, he is traditionally known as a monetary hawk. his view is at least in his past has been you need to fight inflation which means higher interest rates which is interestingly the exact opposite of what trump wants right now he is of course changing his position a little bit lately to make trump like him i mean they're all doing this they're all playing the sycophant role um but it will be interesting and i could see this playing out quite similarly to the jerome powell situation where trump said very similar things about jerome powell and then eventually Jerome Powell held his own and he did what he thought was right for inflation and now they're in this war against each other and the administration is trying to investigate him.

34:29So I think he was

34:31Scott Galloway:the least bad of the options. So I think this went about as well as it could have gone given the circumstances.

34:36Ed Elson:That feels right. I think the markets are doing a collective exhale right now and the key term you used is hawkish. I think the fear was that he was going to put some sycophant alkali in, and the person was immediately going to cut interest rates to 1 % and ignite an upward spiral, a death spiral of inflation. And that was kind of the doomsday scenario. And this guy is known as a hawk. Yeah, he likes Trump's policies, but we knew that was going to happen. Canadian Prime Minister Mark Carney, who's seen as a responsible guy, he was the first non-UK citizen to, I think, chair the Bank of England, called him a fantastic choice.

35:14Ed Elson:advice he's also said warsh has also been critical of the fed for enabling too much deficit spending which i'm i'm a big fan of that viewpoint um so you know he has ties to the billionaire class he's a trump fan but he's i i think you know i think this is a good pick we'll see yeah we'll see i

35:34Scott Galloway:thought the central casting quote was hilarious it's possible that he meant that he has the right resume but i think it's more likely he meant that the guy's good looking and tall i think he's

35:42Ed Elson:listening to our podcast. Central, out of central casting is our term. I think he listens to Fox News and then he turns into Ed Elson. Get that young guy. What's that young guy think? What's that young guy? You know, the guy with the communist professor. Let's arrest him. Let's put him in a cell next to Don Lemon.

36:02Scott Galloway:Yes. That's what's going to happen.

36:04Ed Elson:By the way, just a brief note in breaking news this morning. Don Lemon was arrested and this wasn't an arrest of like a bunch of people trespassing, so one by one. This was a targeted arrest by our attorney general. And when you start targeting journalists, it's not enforcing the law, it's trying to shape reality. And just to bring this back to markets, whether it was Turkey in 2013 or Russia in the early 2000s, the moment you start policing speech, it creates a level of self-censorship that is really bad for democracy and bad for economics. And history is brutally clear here. The moment you start censoring people and arresting journalists, markets just start to fail and the nations become much poorer and much angrier.

36:46Ed Elson:So distinct of what you think of First Amendment rights, targeted abuse and arrests of people who speak out against the Trump administration. Be clear, it's a fast hill down and a slow hill back up to restore free speech. But the moment you put up with the arrests of journalists, your nation is about to get much, much poor.

37:08Scott Galloway:We'll be right back. And for even more markets insights, sign up for our newsletter at ProfGMarkets.com slash subscribe.

38:08Ed Elson:We'll be right back. Give you compliments on your glow. It gets kind of weird. Focusing on your life more than your money. That's the Betterment Effect. Get started today at Betterment.com. That's Betterment.com to start investing. Investing involves risk, performance not guaranteed.

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39:28Scott Galloway:We're back with Prof.G. Markets. 2026 could be a blockbuster year for IPOs. In fact, Blackstone's president said the company had lined up, quote, one of our largest IPO pipelines in history. SpaceX is reportedly targeting a mid-June listing, seeking to raise up to$50 billion at a roughly$1.5 trillion valuation. That would make it the largest IPO in history. OpenAI, meanwhile, is reportedly raising additional funding at a valuation of$830 billion. with discussions underway about a potential IPO later this year. Anthropic and Databricks are also expected to go public this year. So, Scott, everyone said last year was going to be the year of the IPO.

40:16Scott Galloway:It was kind of the year of the IPO, but not really. We didn't really see any huge, big splashes in the IPO market. It seems that this actually will be the year. and according to John Gray, President Blackstone, he says it's going to be the largest ever. Your thoughts?

40:36Ed Elson:It may be the largest ever, but it'll be the largest ever by gross dollar volume raise and unfortunately it'll be crowded into a small number of companies. We've been sort of, we keep getting hints of sunshine that the kind of the nuclear winter and the IPO market is coming to an end and there's the beginning of a thaw and it never quite gets its mojo. so i think they're saying this is there's so much pent-up demand and these companies have you know have reached such exceptional valuations in the private market that they need to find you know the greater fool and the greater fool i think in those instances will be taking these unbelievable brands and an unbelievable technology and giving retail investors the first shot at owning them in terms of the companies themselves you know spacex i think spacex has as big a moat as open ai does not and that is spacex i think it's like 80 or 90 percent of launch capability now it's controlled by one company spacex i think the next big big thing in terms of a company with no revenues being worth 200 billion is going to be space defense all the moons are lining up around that.

41:48Ed Elson:And the infrastructure play, the NVIDIA of space, quite frankly, is SpaceX. I just, I think, I don't, I have trouble thinking of a company that has built a wider moat than SpaceX. Open AI, I think could be, I think open AI could get pulled. I think there's a non-zero probability that Gemini and some of these open weight gain so much traction against open AI. And Anthropic is kind of beating them in the enterprise. It's done a better job of branding instead of branding catastrophe. Anthropic has branded itself as a partner, if you will, and their ads are much clever. They're more about humans and saying this is a tool, not something that could be the end of the world.

42:40Ed Elson:uh i don't think open ai has done a good job managing the brand of late especially the proximity between sam altman and the president i think people are starting to gag on that and i think they're way out in front of their skis in terms of the valuation they're at that they're anticipating anyways i'm very bullish on spacex i i don't know from a valuation standpoint you know how unreasonable the the valuation is going to be but i i very rarely see a company that has the kind of competitive advantage or sustainable advantage it has. And I think open AI sustainable advantage is really, really thin.

43:16Scott Galloway:You mentioned the valuation of SpaceX. You asked the question, is it unreasonable or unreasonably high? The answer is pretty much yes. I mean, one and a half trillion, that would be a price to sales multiple of 97. And you just look at - Palantir. I mean, yeah, true, Palantir. But, you know, Microsoft, when Microsoft hit a trillion dollars, they had$97 billion in revenue. Google had 183. Apple had 265. SpaceX has less than$16 billion in revenue in 2025. But to your point, the moat of this company and the potential growth of this company is also unreasonably high. I mean, as you say, 80 to 90 % of all global launchers, SpaceX is responsible for them.

44:05Scott Galloway:They have and operate twice as many satellites as the rest of the world combined. Also, they're way cheaper than all of their other rivals. And I do think it's going to be, you know, the growth potential of just space as an industry is just gigantic. I totally agree. Space defense could be a huge thing as well. So one and a half trillion dollars, I mean, it's hard to come up with a reasonable valuation for a company that is pursuing such an unreasonable and crazy and unknown business. But the number itself is staggering. One and a half trillion is just completely insane. By the way, if it happens at one and a half trillion, Bloomberg estimates that this will increase Elon Musk's net worth to$950 billion.

44:57Scott Galloway:And now, according to Kalshi, the probability that he will become a trillionaire next year is 64%. So it's more than likely that Elon will be a trillionaire next year.

45:12Ed Elson:Well, thank God he's responsible and not an addict. That could be scary having that much power in one person's hand if that person, I don't know, had a drug addiction or was generally seen as not having a great deal of empathy for HIV positive mothers or yeah. So thank God, thank God he's so stable and doesn't sleep with a loaded gun next to his bed.

45:34Scott Galloway:It is quite striking. That would mean that his net worth would be equal to 3 % of America's GDP. And if you compare this to John D. Rockefeller, widely known as the richest man in the history of America, at the peak of the Gilded Age, his wealth amounted to 2 % of America's GDP. So Elon is basically the wealthiest as a percentage of the pie, the wealthiest man in the history of this country, about to get even wealthier, likely, because of this SpaceX IPO. I feel like there's a lot to talk about there.

46:12Ed Elson:Yeah, and I want to be clear. I think we need billionaires. I'm not sure we need trillionaires, but I think we need billionaires. And one of the wonderful things about capitalism as the incentive structure to make just a crazy amount of fucking money. The thing that bums me out about that is that now that he lives in Texas, he's going to end up paying, does 1202 matter? I don't know. He's going to end up paying a tax rate probably of like 15 % or 18 % on that money. Whereas the people who work, the engineers who work at SpaceX who make$200 ,000,$300 ,000,$400 ,000 a year will end up paying, especially the ones back in California, will end up paying$40 ,000,$45 ,000.

46:45Ed Elson:Some will probably pay 50%. on. Anyways, our first, wow, wow. So, CalShare Polymarket predicts it's going to be, it's more likely than not, it'll be a trillionaire. That's just wild.

46:57Scott Galloway:By next year, if you look at by 2028 or 2029, the odds go up to above 80%. It's basically baked into prediction markets that Elon will become a trillionaire within the next few years, likely, more likely than not, as soon as next year.

47:12Ed Elson:Yeah, hand it to SpaceX and Elon Musk. I mean, technology is changing the world of protests. It's changing what would have happened? What would have the response been to the activities of ICE in Minneapolis had there not been the advent of camera phones, right, or of cameras on phones? It just would have been, you know, one narrative versus the other. And also SpaceX or Starlink terminals in Iran have helped kept the world apprised of what's going on. So both of these technologies, and I think Elon's done a really good job of trying to ensure, I assume it's him, trying to ensure that the people of Iran have some sort of communications hotspots.

47:55Ed Elson:And also when I paid like$50 ,000 or$70 ,000 to have crazy high-speed internet in my home in London, and they had to run a cable across Regions Park or whatever, and of course it went out. And this guy was running around, and what did he do? He installed Starlink. And it wasn't as good as the fiber, but it was the quickest, best, quick solution. It's an incredible product. I used Starlink on a plane the other day, and I could have done a podcast. It was that good. It was—anyways, I just don't think there's any denying. I think SpaceX is going to be worth more than X, worth more than Tesla, worth more—I think that's his, I don't know, his golden egg, if you will.

48:42Scott Galloway:A question about investing in IPOs. I mean, this is obviously the question. Don't. Excuse me?

48:49Ed Elson:It's an easy one. If you have access to the IPO, absolutely. But buying on the first trade is usually a bad idea.

48:55Scott Galloway:Right. Yeah. So we've got Canva, we've got Revolut, Stripe, Databricks, Anthropic, OpenAI, SpaceX. Your view on these is don't invest. The game is fucking rigged.

49:07Ed Elson:It's essentially either you're powerful and know the CEO or have influence or you're an institution that gives so many fees to these investment banks that they give you an allocation. They purposely price it 10 to 40 percent below what they think the market with the first trade will be. The institutions and the powerful friends of management get in, get easy money, and then the retail investors get to come in and buy the first trade, which is usually, you know, at market. it. So buying on the first trade of these things has not been a high return strategy in the last couple of years because these things have been so priced so aggressively.

49:41Scott Galloway:That is exactly the data I've got in front of me. Institutional investors earn about three times more than retail investors on the IPO. The reason being the institutional investors, the inside is they get early access, which gives you access to a price that is almost always discounted to what the stock goes at after it's gone public. So we saw that with Figma as an example. And as a reminder, again, we were saying that Figma was a good buy at 33, which was the IPO price. Then it gets listed on the public markets. Some people got access to that price. But if you did and you're a retail investor, if you got access, it's most likely you only got one share.

50:21Scott Galloway:Then it lists and it goes up to 120. So it's likely that the same thing is going to happen for a lot of these IPOs. And I think because there is so much pent-up demand, because we've seen so few IPOs over the past year, it basically means that that opening price is going to be even more crazy. Because everyone's going to want to get in on the OpenAI IPO and the Anthropic IPO and the SpaceX IPO. And it's going to be a completely irrational price. But what will be interesting is to see the insider's price. What are they going to price it at for them? And I think for those guys, otherwise it's basically a given that you want to buy um at that price because yeah i think it's as you say it's it is a totally rigged game i'm not sure what to do about it um from a regulatory perspective it seems unfair that insiders just get better returns that's just the way it is um but yeah i think that's that is the truth that you highlight one interesting idea is the

51:28Ed Elson:tokenization of companies from a very early stage. So everyone has access early stage, fewer transaction fees. The thing I hate about the secondary market, I get opportunities all the time as anyone does through SETR, you know, all these secondary markets is it's very inefficient. They want to charge you 7%. You don't have confidence to buy because it's not a liquid market with a price. But I like the idea of some sort of tokenization where you use AI to grade the compliance of the company and the disclosures and the transparency. But from a very early stage, you can buy tokens in these startups and they don't go public.

52:02Ed Elson:They just have a publicly traded currency that represents ownership. The problem is that creates all sorts of disclosure requirements. But I wonder sometimes if the SEC and these regulatory bodies want to hold onto their jobs as opposed to acknowledge that, you know, the entire market has become very speculative. And there's so much opportunity for speculation that people have with their money. What exactly, who exactly are you protecting from what with these, you know, and I think AI could serve, we've talked about this as a pretty thick layer of disclosure where you buy a token and your buddy that started that company, Rogo, that has that layer of innovation on top of AI for financial services companies.

52:46You know, should that company have tokens right now that anyone could buy?

52:49Ed Elson:And it never goes public. It just keeps increasing or decreasing in value. But there's got to be some sort of innovation here that gives retail investors access to this stuff.

53:02Scott Galloway:Yeah, I think my view on this is the line between private and public markets has become so blurred at this point that it should really just be eliminated. I mean, the fact that we have all these investor accreditation laws that are supposed to protect people from buying shares and opening. Meanwhile, you can buy Cum Rocket and PepeCoin is just completely ridiculous.

53:24Ed Elson:Or bet on the Super Bowl on like what if the next play is going to be a run or a pass.

53:28Scott Galloway:I mean, enough already. Exactly. And it's like, oh, no, we want to make sure that you're only investing in real companies. So that's why we're going to have to go through this accreditation process. And you're going to have to prove to us that you've made$200 ,000 a year for two years in a row. And then you're able to invest in these private companies. It's just completely ridiculous. So all of these private companies, everyone should be able to invest in them. If we're going to say that crypto is legal, then investing in private companies should also be legal. My only problem with the tokenization point is I feel like it assumes that it needs a crypto aspect because crypto is highly associated with tokenization.

54:08Scott Galloway:I don't think it needs that. I think all you need to do is say anyone can invest in private companies. That's the law. And so let them invest. And then that will mean that the New York Stock Exchange and all these public exchanges can reach out to private companies and have them list. and it basically just means that everyone can list as a public company i don't think you necessarily need crypto or ai to enable that to happen i take your point about um you know getting the auditing done on some of these companies but the reality is we're not auditing prediction markets we're not doing any of that shit on crypto so why are we pretending that we should be doing it with companies too yeah but i was thinking about you know we do a plan every

54:52Ed Elson:quarter or we get i get all the financials from them i try to pretend i have a board at prop g media by the way i love not having a board but i try to pretend i have a board and i do kind of an internal quarterly board meeting where who's on the board oh it's it's scott galloway and his 17 alternative personalities it's news to me i didn't know we had a board i didn't know we had a pretend board i'm gonna have the second or third board members will be those two hotties from that gay hockey series. I want to put those two on my board. But what I do is I put together a board deck or something resembling a board deck.

55:24Ed Elson:Basically, I ask Karen and the finance team to put together all these metrics. And I run it through AI, where is there opportunity, where there isn't. I look at it. I've gone through a million board decks. But I was even thinking about publishing it because, A, I think it's illuminating how an entrepreneur thinks about a small media business, a niche media business that's trying to grow 20 or 30 % a year and trying to grow its EBITDA 40 % a year. But also, I do think that I just, I think AI, I think AI could say, all right, I think there's a business in becoming an SEC, an AI version of SEC where it says, all right, we need the following, I need the following access to the following APIs.

56:04Ed Elson:I need access to your company's bank account. It'll be anonymous, not going to release any information. I need access to your payables. I need access to your client contracts. I need access to, and if you give me access to all of those things, I'm going to put out a rating on your company and I'm going to write fantastic analyst reports and it'll give people the confidence to invest or not invest and you could create it almost like, well, if you don't have this good housekeeping seal of approval, stay away. And then you could have a much simpler, much lower cost means of buying and selling shares or tokens in that company as long as it had this AI audit on a regular basis And it could do it every day.

56:43Ed Elson:But just total transparency, you wouldn't have insider trading problems because everyone would kind of know everything. And if a company says, well, for strategic reasons, we don't want the AI publishing that we're in a deal. We're thinking about acquiring this company. It's like, yeah, there's certain things that are anonymized, certain things that are not disclosed publicly. But we have metrics on how well the AI in a millionth of a second says this is how good they are at return on invested capital. This is how good their turnover is or bad it is. This is how good they are at managing their IP.

57:11Ed Elson:This is how good they are managing their expenses. This is their renewal rates. And it doesn't even need to publish that. It just gives it a rating and says, oh, also on a fraud detection thing, we see almost no evidence of fraud or there's something fishy going on here or their internal checks and controls don't seem to be up to snuff. It's just, there's this gigantic administrative infrastructure, bureaucratic government layer in between investors and companies that is expensive, cumbersome, and I would argue is now not probably adding the value that an AI infrastructure or AI layer could. I mean, again, it's the boring shit that moves the needle.

57:54Ed Elson:It doesn't sound fun, right? But I think that could be...

57:57Scott Galloway:It doesn't sound fun, but it also sounds difficult. and you better hope that AI isn't hallucinating, current technology will not really guarantee you that at all. I mean, if it's possible for ratings agencies and Moody's and S &P to hallucinate as they frequently do, then think about the hallucination rates of the AIs. And then are we taking that at face value? This is the truth. This is what's going on with this company. These are the risks.

58:24Ed Elson:Well, what's closer to an objective truth, right? Because Moody's had AAA ratings and all the bonds, the subprime bonds, before they literally folded and almost took down their global economy. What I think is important is the reason you have Moody's and Fitch is, and I forget the third one, is you benchmark them against each other. And what I always do, I never ask one LLM a question of any importance without asking two or three and then cross-referencing them. And I think you could do that here. I think you would run it through a variety of LLMs to say where, because you're right, it gets it wrong all the time, but I would argue.

58:58gets you wrong all the time i mean it i'll ask it a question i'll say this is the answer and i'll

59:04Scott Galloway:say no it isn't and they're like oh you're right no it's not there it's this no it isn't oh sorry you're right it's this it's on and on and on and on i find the ratings agencies and those guys have finally been so weaponized by who their clients are and anyways um i find it's the boring shit

59:24Ed Elson:that moves the needle. If I were thinking about an AI startup, I would think about trying to connect it downstream with Galaxy Digital or something around tokenization and some sort of rating method. AI-driven, no mercy, no malice, can't influence it, can't bastardize it, that puts out a rating on a company that you then have the opportunity to buy tokens in.

59:44Scott Galloway:Okay, let's take a look at the week ahead. We'll see job openings for December. We'll also see ADP employment data and the employment rate for January. Meanwhile, we will get earnings from Amazon, Google, Palantir, AMD, Disney, Uber, Pfizer, Eli Lilly, and Novo Nordisk. Scott, any predictions?

1:00:02Ed Elson:Well, I'm talking my own book here, but basically, I think these economic strikes are about to become a static part of a new arrow in citizenry quiver of pushing back on governments. And that is, and we talked a lot about this, my observation is that the current administration and also leadership around the world is now responding more to markets than they are to the citizenry or even the Supreme Court. and that while protests are effective, I'm not suggesting they're not, they're very cinematic, but I would argue that the current administration has only responded to changes in the economy and the markets.

1:00:40Ed Elson:And the greatest political movement in history in terms of action and size of action was in Q1 of 2020 with COVID. And again, it wasn't because hundreds of thousands of people started dying, it's because GDP went down 31%. And the greatest act of, again, And the greatest act of radical transformation, you know, kind of radical action in a capitalist economy is non-participation. And I'm seeing a bunch of economic strikes, including the one that we're organizing, pop up. And I think that the marketplace, this vulnerability around such a huge concentration of value across a small number of companies, who also happen to be the companies, many of whom who are enabling the president with their sycophantry or showing up to premieres or giving money for a new White House or whatever it is, Your free gift with purchase here is that a small number of companies have a big impact on the S &P, so a small amount of action, canceling Apple TV +, canceling your Amazon Prime just for the month of February, going to one streaming platform, having one LLM versus two, and being loud about it will get a lot of attention.

1:01:45Ed Elson:And you're going to see national economic strikes. You're going to see a bunch of them, and they're about to become a static part of the resistance. And if you like what I'm saying, don't like and subscribe. Resist and unsubscribe. And by the way, that's our website, resistandunsubscribe.com or unsubscribe February. We have a list of the companies at ground zero that would have a disproportionate economic impact on the markets. And then we have something called the blast zone, and that's companies ranging from Home Depot to Hilton who are kind of aiding or participating in the support of providing infrastructure to ICE.

1:02:23Ed Elson:And anyways, prediction, national economic strikes are about to become the new technology of pushing back on what I think are fairly upsetting policies of terror and anxiety in the United States.

1:02:37Scott Galloway:This episode is produced by Claire Miller and Alison Weiss. Mia Silverio is our research leader. Our research associates are Isabella Kinsel, Dan Chalon, and Christian O'Donoghue. Benjamin Spencer is our engineer. Drew Burrows is our technical director. And Catherine Dillon as our executive producer. Thank you for listening to Prof G Markets from Prof G Media. Tune in tomorrow for a fresh take on the markets.

1:03:01Lifetimes

1:03:07You have me In kind reunion

1:03:18as the world turns and the dark flies in love

1:03:36Scott Galloway:Rinse knows that greatness takes time,

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