Did Anthropic Just Kill Software?

18:34Scott Galloway:And the notion would be okay, and I remember even someone writing an article saying there's all sorts of different options on campus for food. to eat somewhere else was a hassle and expensive and required a huge change in consumer behavior. That's the way I see this. And that is, there might be a new AI company that comes out that is a better CRM for half the price of Salesforce. Good luck trying to get your entire Salesforce to figure out a way to input and figure out the interface and the mobile application. you know they're going to say fuck that let's just stick with salesforce now the next time they're negotiating next year with a huge site license for i don't know mckinsey or whoever who uses salesforce to manage all their potential clients and people who think that someone with a phd in a northern european accent knows any more about their fucking business than they do the procurement department at mckinsey will use all of these ai crm startups to negotiate a lower price, but I don't think they're going to swap out a cloud flare of all these companies do such a good job of creating friction to exit.

19:45Scott Galloway:I remember when I was not running, but I started in my red envelope, I think we were using Oracle and BroadVision and Oracle was powering our database, but trying to switch out of Oracle, they purposely make it almost impossible. These These companies do a really good job of making it easy for you to sign up. Like I find when I check out of a hotel, they make it so easy for me to pay. They're like, okay, we've already taken the payment. What's really hard is if they charge you for breakfast you didn't order, it takes, you know, several calls and years to get your money back. And it's not worth it.

20:28Scott Galloway:It's the same thing here. These companies will experience margin pressure because the procurements departments will have a lot of options and they'll threaten it. But they're not going to tell their 4 ,000 media department at L 'Oreal to start using some other software program to figure out how to track clients or payables or whatever.

20:51Ed Elson:Right now, these companies, their revenues are growing and they're actually growing at double digit rates. So it's not that people are upset with the product right now. They actually like the product. And every company that has an enterprise relationship with one of these software companies, they're going to be trying to find reasons to continue the relationship because it's too much of a pain to get out of it. They don't want to do that. In addition, they're going to be integrating AI into the products themselves. So it's not like, I mean, it's not as if Salesforce suddenly doesn't have AI. Salesforce is investing a lot in AI right now, and they're going to roll out those products to their customers.

21:31Ed Elson:So I think it's a lot of hysteria over something that is not that meaningful. And, you know, it's rare that you have these moments where there is such, such momentum in the selling pressure among the markets. And so I think these are the moments where you want to go in and buy. Mark Mahaney calls these kinds of companies DHQs, dislocated, high-quality companies. That is, you want to find good companies that are experiencing some level of dislocation. I have a few names that I have bought. And who knows what will happen to the prices, because the markets are going crazy right now. What did you buy?

22:11Ed Elson:Inquiring minds want to know. So I bought three stocks. The first stock was Adobe. And just a disclosure, Adobe has sponsored this podcast in the past. I made this pick last week, and I stand by it. It's down 9 % since Monday night. It's down nearly 40 % in the past year, trading at 17 times earnings. The S &P average is 29 times earnings. Its five-year average, its five-year PE average is 37. So the assumption is AI is just going to kill Adobe overnight. But again, this is a large enterprise company. Wow, it's at a five-year low. It's getting absolutely decimated right now. But it's used by 98 % of Fortune 500.

22:53Ed Elson:We've also talked about this with the research team. They have this major tailwind, which is short-form video. Everyone's trying to hire video editors right now, and every video editor is using Adobe Premiere. They've got a lot of things going for them, and they're going to start integrating AI. So I think Adobe is a buyer right now. We've discussed that. I also think Salesforce is a buy. It fell around 11 % at first. It kind of recovered. Again, we'll see how it trades in the next few days. You've got to move quickly here. It could be that by the time this episode airs, it's back up, but it's down 45 % in the past year, trading at 27 times earnings.

23:31Ed Elson:Its five-year average is 73. It's growing at double digits. Its RPOs are up 12%. Again, this is like a massive enterprise SaaS company, which again has really large moats. My third pick that I bought is ServiceNow, trading at nine times sales, five-year average of 16. People just assume AI's killed it. But again, they're integrating AI. They've got$1 billion in AI revenue in the pipeline for 2026. They're integrating with Anthropic and OpenAI. They've signed contracts with these companies. So those are some buys that I've gone with. Again, do whatever you'd like. I think that these are good opportunities.

24:10Ed Elson:And then the other thing that you could consider right now is just buying the ETF, which is called IGV, just the whole software ETF. But my view is it's possible that there are going to be some losers here. So I think it's better to go in and start picking some winners. But that's what I've gone for. I also would have gone for Microsoft as well, but most people have just huge amounts of Microsoft exposure already. But that's gotten pummeled as well. And again, it doesn't really make sense because Microsoft owns a huge portion of OpenAI already. So if OpenAI is going to kill Microsoft, well, Microsoft already owns it.

24:47Ed Elson:So it's going to be totally fine.

24:48Scott Galloway:I really like your thesis. I was asked, I didn't think of software companies. I was asked a couple months ago, what are the companies that, if you had to bet, if you had to go short companies because of AI boom, which companies would you pick? And I picked two. I picked OnlyFans. And I think I told you like six months ago, someone called me and said, do you want to be a part of an investor group to buy OnlyFans? I'm like, one, no. And two, why would you think I'd be interested in this?

25:15Ed Elson:Why wouldn't they think you're interested? I've never signed up for,

25:20Scott Galloway:anyways, I've never signed up for a porn site or anything like that. Although those gay hockey players from Harvest Moon or whatever it's called, meet a rivalry, I would definitely, like$4.99 a minute, I'd do that. Like, hey, I love your program. Anyways, I'm unsubscribing from HBO Max, and so I'm binging the gay hockey thing, and I'm rethinking everything, Ed. I'm rethinking everything. Anyways, back to, what were we talking about? Oh, AI. OnlyFans, I think it's fucked. I think you're going to be able to get a really hot person, you know, doing whatever it is they do on OnlyFans for 3 % of the price with AI.

25:57Scott Galloway:And the other company, it's not really a software company, it's a research company, and it's the company that acquired my company. I think Gartner is fucked. And that is every research report they put out, their events are still really powerful, but every research report they put out, I feel like almost any IT manager or any CTO could get a similar level of feedback with a two-minute prompt. And their stock at this in the last year, it's off 72%. My guess is that an activist is going to come in there and say, you need to lay off 70 % of the people and use AI and offer, have a kind of a, what Figma is to Adobe.

26:37Scott Galloway:IT is, Gardner is going to need to come up with a lower cost product. But I hadn't thought about the software guys getting this badly hurt. But I, if you use Adobe, you're fluent in Adobe. It's its own language. It's its own job requirement. And we like Figma. All the kids are using Figma in design schools. It's also gotten crushed. Gotten crushed. Yeah, I own Figma. Anyways, we should timestamp this and come back in three, six, and 12 months and see how these stocks are doing. ServiceNow is an interesting one. I've spoken at their conferences, but I don't know that much about the company.

27:20Ed Elson:Yeah, it just, again, massively oversold. But your Gartner point is an interesting one because Gartner would be one of those companies that is in that bucket of companies that have been absolutely crushed due to the AI thesis. But this is where I think stock picking actually does come in handy and it actually is useful. I mean, I know that we're usually pro ETFs, just, you know, it does diversified indices. But when something like this happens, where a technology comes in and it just decimates the whole narrative of an industry, and it's not unreasonable, I mean, the idea that AI is going to massively disrupt software is a very reasonable pick.

28:00Ed Elson:The point being, there are going to be winners and losers. It's possible that there will be losers in this, which is why you want to go in and figure out, OK, what are the winners here? Because right now, everyone is being undervalued right now. Everyone is getting sold, regardless of what you're doing with your business. And that's why I think I've chosen a few names as opposed to going for the whole bucket of companies themselves. Because I do think it is reasonable to look at what's happening and say, okay, well, this company isn't taking AI very seriously. This company's product actually isn't very differentiated.

28:38Ed Elson:And their relationships with their enterprises isn't as strong as some others. Therefore, this one actually will get burned. And maybe Gartner is one of those companies. but it is a moment where it's like okay if everyone's selling at some point you do need to go in there and start as buffett says being greedy while everyone else is fearful agreed 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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32:47Ed Elson:We're back with Prof G Markets. It was a busy week in the entertainment industry. Disney finally named its next CEO, Josh DeMauro. He is the head of its Experiences division. He'll take the helm from Bob Iger next month. Meanwhile, Netflix and Warner Brothers Discovery executives were on Capitol Hill defending their planned mega merger. What started as an antitrust hearing quickly veered into a broader fight over political bias. Senator Eric Schmidt went as far as accusing Netflix of producing, quote, the wokest content in the history of the world. So, Scott, we've got a leadership shakeup at Disney, new CEO, going to replace Bob Iger.

33:26Ed Elson:And then we had this antitrust hearing in Washington, investigating the acquisition of Warner Brothers Discovery. Let's start with the antitrust hearing and let's start with just some of the highlights from that hearing. Let's play a clip.

33:39Scott Galloway:Senator Ali, Netflix has no political agenda of any kind. I would tell you that. Well, then why is your children's program so full of this highly sexualized, highly controversial, highly controversial agenda? I don't I don't I don't understand it. It seems strange to me. Respectfully, sir, it's because it's inaccurate. We have millions of hours of children's programming. You're saying it's not there. You don't you don't have trends. You don't feature trans characters, trans storylines, trans themes. It's the same. It's not in your programming. I'm saying we feature a wide variety of stories and programs to meet a wide variety of people's tastes.

34:13Scott Galloway:Why does almost half of it, why does almost half of your children's program feature this highly controversial, highly sexualized material? That just seems strange to me.

34:22Ed Elson:Netflix content is synonymous for the modern phenomenon of race swapping both historical and real and fictional characters. Netflix continues to push sexual and gender theory on kids. and maybe this is what was being referred to earlier, 41 % of G-rated, kid-approved series contain LGBTQIA plus content.

34:43Scott Galloway:You have a wide range of programming on HBO. Name one program that is designed to appeal to conservatives. We don't design our programming to appeal to I can think of a lot that are designed to go to liberals. Name one. Let me ask you, do you think CNN is fair and balanced? Sir, I'm not involved with CNN. And in fact, they're not part of this transaction.

35:02Ed Elson:Remind you, this was an antitrust hearing. Scott, your reactions.

35:06Scott Galloway:J.D. Vance goes to Europe and lectures EU leaders on their lack of free speech. And now the Republican Party is claiming that private companies have an agenda and they're not allowed to. So to be fair, CNN is biased. Fox is biased. And private media companies are allowed to have a bias because consumers have a bias. Netflix is probably the most politically neutral of all of them. They were getting shit two years ago for airing Dave Chappelle because progressives were freaked out about what they felt were anti-trans comments. So which is it? I know Ted Sarandos. For the life of me, I could not figure out what Ted Sarandos' politics are.

35:47Scott Galloway:And I think he wants to keep it that way. So this notion somehow, and also, I don't even need to know the data. And I know that it's bullshit that 50 % of kids' content features an LGBTQ, that is not their agenda. They're just trying to get kids to spend more and more time watching Netflix. They don't have any sort of agenda along those lines. And even if they did, guess what? They're allowed to. The antitrust is a real issue here. And that is, if Netflix also owns HBO, do they consolidate the market at the high-end artisanal subscription content. That's a real issue. If Paramount slash CBS is allowed to own CNN and TikTok, is that also an antitrust concern?

36:33Scott Galloway:That's a real issue. But this is what's going on. The Ellisons give money to Republican lawmakers. The Ellisons are trying to come up with a reason for Netflix to not be able to acquire Time Warner. And so they are ginning up a bunch of Republican senators to create some sort of controversy or reason why Netflix should not be able to acquire Time Warner. There are reasons why neither Paramount, CBS, slash The Ellison should be allowed to acquire it. There are reasons Netflix should not be allowed to acquire it. They are antitrust. It has nothing to do with the bias or the lack thereof of their content.

37:16Scott Galloway:And this is Senators Hawley and I forget the other guy who are just fucking coin operated, who've been told by the Ellisons, we don't want to have to pay more. So go create controversy and some sort of bias among people who have absolutely no ability to think critically about when regulators should weigh in and they shouldn't. Quentin Tarantino films have a fucking bias. They're allowed to sell to whoever they want. This isn't about an editorial bias. This is about a concentration of power that would lead to higher prices, of which there are real concerns. And Senator Booker actually thoughtfully tried to address these concerns.

37:56Scott Galloway:But instead, you have coin-operated senators with the Ellison's head so far up their ass you can barely see their legs dangling out of their asses, trying to pretend they give a flying fuck about free speech and that somehow Netflix is too progressive. and the right answer to, oh, CNN doesn't have a bias, it's more fair and balanced. He should have said, I believe it's more fair and balanced than Fox. And I believe Fox has the right to do whatever the fuck they want, and people can decide if they want to watch or have advertising. This was supposed to be about concentration of power that transfers capital and power from consumers and workers to shareholders.

38:35That is a real concern from both bidders.

38:39Scott Galloway:But this is how it's supposed to work. Whoever shows up with the biggest check gets pre-approved for the acquisition. And then there is review across the DOJ, the FTC, and CFIUS around security concerns and antitrust. Instead, we're thinking somehow that they're not allowed to have a bias even when there isn't one. Anyways, thank you for my TED talk.

38:59Ed Elson:It's completely ridiculous. And again, it was a hearing on antitrust. And it just completely devolved into a trial on wokeness. I feel like this is yet another reminder, and I know we say this all the time, of how stupid these Senate hearings are. Like, every time these hearings are happening, it's just a giant display of political theater. None of it even matters. And I think it's so funny that these people, these Republican senators, default to the wokeness argument, probably because they don't really know where to land on the antitrust argument. Because the trouble is that you've got all these different players in here, and they don't really know who to side with.

39:39Ed Elson:Because on the one hand, like, oh, maybe Netflix is woke, so maybe they should be against them. But on the other hand, Paramount's controlled by the Ellisons, and the Ellisons are big tech. And but, you know, historically, they've been against big tech. but also, oh wait, the Ellisons have been donated to Donald Trump, so who are we supposed to side with? So it's almost like wokeness is just the default backup calling card that you immediately knee-jerk reaction go to when you don't really know what the fuck you're talking about. And that seems to be what has happened in this Senate hearing, which was supposed to be, again, what do you do when an extremely large entertainment company is purchasing another extremely large entertainment company, and most of these entertainment channels are now going to be housed under one company.

40:23Ed Elson:That has very legitimate and serious monopoly concerns. There are also decent arguments on the other side about the role of YouTube and Instagram and TikTok and all these digital platforms. But it's almost like that stuff is boring to them. They don't really understand that. That's business stuff. We don't really care. I'd rather talk about LGBTQ and transgender transgender actors in children's shows, because that's something that I know my supporters are really going to get riled up about. Is it going to have any impact on the transaction? Is it going to change the trajectory of monopolization in America?

40:56Ed Elson:Fuck no. But it doesn't matter. Because again, it's all for the clips. It's all for the drama. It's all for the show. And this was just another reminder of that.

41:05Scott Galloway:You know how people say the politicians are speaking to a crowd of one, like whenever Secretary Noem speaks, she's just thinking, does he want me to say this? Does he want me to say that? They're all playing. They're all playing to President Trump. Senators Hawley, and I forget the other one, they all had an audience of one, but it wasn't President Trump. It was Larry Ellison. And unfortunately, the only people who demonstrate any actual domain expertise or any fidelity to what the actual hearing was about was first and foremost, Senator Klobuchar. I mean, here's the thing. If we're going to talk about affordability, Throwing$40 billion at soybean farmers while pissing up China and then taking that money and giving it to Argentina, who's now – none of this shit works.

41:48Scott Galloway:Tariffs are inflationary. Nobody wants to have an adult conversation. If you want to bring inflation down, the two things we need to do – and there's a variety of things, but the two biggest things, free trade, get rid of all these ridiculous tariffs, reduce tariffs. There'll be some losers. Some businesses in manufacturing and services will go out of business in the U.S. But eventually when you protect your domestic markets at some point your competitors abroad own fucking everything and then eventually they come for your lunch And two massive antitrust I'm finally like have enough money and enough influence right now.

42:25Scott Galloway:I know i'll have if there's a democratic president i'll know i'll have his ear And amongst a variety of things whether it's Whether it's mandatory national service 25 dollar an hour minimum wage single payer health care, whatever it is I'm going to push so hard and say the way you oxygenate the economy, the way you bring down prices over two, five, 10 years is massive antitrust. As voters, we're lazy. We're looking for a quick fix. Oh, gas prices are down. That has nothing to fucking do with us. That's about shale in Canada. That's about geopolitics. That's about Saudi Aramco deciding to open or close or tighten the spigot.

43:00Scott Galloway:That has nothing to do with anything. If you want prices to come down, You need massive free and open trade. And you need specifically to break up all of these monopolies who are charging monopoly rents. But nobody wants to have an adult conversation around the hard structural work of actually bringing down prices. But the fact and I hate the fact that we're talking about these village idiots who are coin operated at the hands of the Ellisons as opposed to Senators Klobuchar and Booker who actually want to talk about the issue at hand. No, I 100 % agree.

43:31Ed Elson:It does feel that every time an antitrust lawsuit comes up, or there is an implication that there could be potentially a monopoly on the table, we always come up with an excuse as to why it isn't actually a monopoly. In this case, it's the YouTube and Instagram and TikTok argument. The argument is, if YouTube exists, and if TikTok exists, and if Instagram exists, then, you know, they're competing against these platforms, which, you know, I get. I understand that argument, and it makes a lot of sense. However, are we ever going to have a moment where we decide, actually, no, this isn't okay? I mean, the same thing happened with Google and the Google antitrust case.

44:10Ed Elson:And then they decided, oh yeah, you were operating a monopoly, but AI came along and AI really destroyed the business. And so now we found another excuse to not have any antitrust enforcement. It just seems that every time we come up with some reason, whether it's wokeness related or otherwise as to why we shouldn't be implementing any form of regulation and so yeah it's it's not a surprise that the market looks the way it does because we've just decided that we don't really want to do anything about it let's also talk about uh disney's new ceo josh tomorrow he's the head of parks he's going to be taking over on march 18th when Bob Iger will be stepping down.

44:48Ed Elson:He's been working at Disney for 28 years. He has been crucial to expanding the Disney experiences business, which is basically their parks and cruises, which is now the core piece of the business. And this is a whole other conversation, but it is fascinating how that has changed, where the highly capital-intensive piece of the business, which is operating a theme park, used to be way undervalued by investors, but now the narrative has flipped. They're less interested in certainly the linear, also kind of the streaming. They're very excited about the experiences. He's been running that business.

45:24Ed Elson:So now he's going to be taking over as CEO. Do you have any reactions to this new pick and the end potentially of the reign of Bob Iger?

45:33Scott Galloway:Bob Iger is the guy that after coming back from Vietnam, a war hero, decided to go back and had his legs blown off. That was one of the worst personal decisions in corporate history for him to start heckling from the cheap seats around his successor and then convince his board that he should go back and shed shareholder value. I mean, it's just been, and a lot of it isn't his fault. He's basically, you know, the market has poured honey on him and sent him hunting for bears. I like that. That's like something that Brian Williams would say. That's like having a moose in a convertible. Anyways, why does that make me happy yet?

46:11Scott Galloway:Look, this company will have an overhang. This is also a buy. This company is going to have an overhang until they're able to get rid of their linear stuff. And that is, you know, Disney, Nat Geo, ABC, because in a conglomerate structure, and I experienced this at the New York Times where I was on the board for two years. I don't know if you knew that, but yeah, I know it's very impressive. So, but here's the bottom line. We had some great assets. We owned 17 % of the Red Sox. We had, we owned the seventh tallest building in the world. We owned a really outstanding media company called the New York Times.

46:44Scott Galloway:And then we had all these shitty regional papers that were a melting ice cube. And what happens in a conglomerate business model, we also owned about.com. Anyway, what happens in a conglomerate model with stuff that makes no sense, the market hates it and the market finds the shittiest business and assigns that multiple to the entire business. And essentially every analyst report and Q &A and earnings call or the investor relations or Bob Iger on a call goes something like this. parks unbelievable business with an incredible mode around it film studio doing well creating ip that is drafted into our parks singular experience no one can compete with our parks if you don't take your kids to a 1400 a night shitty hotel with shitty food and take them to disneyland four or five times by the time they're 10 someone's going to call child services on you disney streaming is getting some leverage it has singular positioning around family you know people say they've missed stuff and they miss trends i don't buy that i think disney still does a great job with their IP.

47:42Scott Galloway:Very talented people, outstanding culture. All of it's great. And then they have to go, but our linear platform showed 8 % decline in revenues and 14 % decline in EPS. As soon as they shed that shit and go good bank, bad bank, or sell it to a consolidator, and it's all about the parks and it's all about the experiences, cruises, and the streaming and the studio, this company goes up substantially in value. Disney is at a 10-year low. And Bob has clearly had the for sale sign out on those networks, but I don't think he's gotten, no one has offered him probably the price he wants. He probably has an unrealistic view of the value of ABC and ESPN.

48:23Scott Galloway:By the way, ESPN used to be the cash cow for Disney, just to tell you how much things have changed. The other thing is, I wonder if the last six months are going to be awful because the fact that he's leaving, he's actually leaving ahead of schedule, says to me that he looked at the back half of the year and went, oh, fuck, I don't want to be around for this. And by the way, I loved your interview with Rich Greenfield. I always learned when I listened from Rich. And you had him on markets, right? When did you have Rich on? We had Rich on last week. That's right. You do this some days when I'm not on?

48:55Scott Galloway:Anyways, that's what you call scale. By the way, do you see all the stuff behind me? I do. I do. I love it. How awesome is that? It's great. Oh, and who noticed it first, by the way, and why? Who noticed it first? I don't know. Let me go to this way. Who's not up here? Who's not up there? Kara Swisher. She gave me so much shit. I'm like, let's be honest, Kara. Let's go. You're my ex-wife. These are all my Belarusian hookers. I am so down. These people are making me money, giving me more joy. And you're just the first wife. Oh, man. Belarusian hooker. I can't afford the Russian hoes. I go for the Belarusians.

49:30Scott Galloway:anyways that's probably a hate crime um this is don't worry about it this is disney is i think an undervalued asset the parks guy is the right pick these things are they're gonna i believe the back half of the year might be rough for them because of our head up your ass tariff economic warfare against our strongest ally canada anyways the park's amazing the film studio amazing The streaming media company is starting to get real momentum. They have to get rid. And by the way, the new co, whether it's the independent, whether it's just bad bank and they spend them out on their own or someone consolidates them, that will also be a good stock to own because it's a different complexion of capital.

50:16Scott Galloway:As long as you reduce costs faster than revenue declines, you can churn out and consolidate all the other cable guys. I think that's going to be a good stock. But until they do this good bank, bad bank, it's always going to be assigned a multiple of a shitty cable ad-supported company that is not growing. And the reality is Disney is growing. I believe if the new CEO sold all of the linear, all of the linear, right? Nat Geo, ESPN, ABC. I think if they sold it for a dollar, the stock would go up. I think I agree. because everything they're doing is an apology. Everything is, yeah, but, yeah, yeah, yeah, but.

51:02Scott Galloway:The overhang of these linear networks, the confusion of the business strategy, the constant apologizing for the last 20 minutes of the earnings call, is just an enormous overhang on the stock. 100 % agree.

51:15Ed Elson:I think the question now being, when is it going to happen? And potentially, it's going to happen now that they have a CEO. Because, you know, remember, you've been calling this for a long time. You've been saying this is an issue, not just in the last few months or the last year, but I think you've been saying this for years now. They have to get rid of the linear assets. I would imagine that everyone's going to be hammering on Josh DeMauro's door, demanding the same thing. So I wonder if now that we've got a new CEO in the building, is it actually going to be possible, perhaps you have a prediction on if this is actually going to happen or not.

51:53Ed Elson:But I will ask you the question, do you think it's going to happen in the next, say, 12 months?

51:58Scott Galloway:The good bank, bad bank, the sale of the linear assets? Yeah. Oh, they've been for sale for two years. It's just a question of who can show up with an offer. And I imagine there's probably some content or, who knows, creative contracts that are sort of trying to, you know, un-mess or un-fry or unscramble an egg. But these, it's not a matter of if, it's just when. So, and I think they were probably hoping they'd get a better price for ESPN and they just never got the number they wanted. But absolutely, this guy has, typically what happens with a new CEO, you can do almost anything and your board just rubber stamps it.

52:38Scott Galloway:You have a honeymoon period. So whenever you have a new CEO, you want to say to a boss, okay, go hard, go early, because you have license to do whatever the fuck you want right now. He should do it. If he can, do it right away. Do it immediately.

52:52Ed Elson:By the way, it's starting to sound like forced seller territory. And I mean, there's two options. Either you sell it to a private entity or you spin it and you take it to the public markets. But, you know, we saw what happened with Versant. They did the spin. It went terribly. The stock's been absolutely crushed. So I wonder if they're going to be looking for a private buyer. Either way, it seems like they have to sell. It's making me think that you need to put a consortium together and make them a somewhat measly offer that they must accept. I feel like that could be an awesome investment.

53:31Scott Galloway:Versons at$4.3 billion. It's one year returns. It's off 35%. You're right. But someone needs to roll up these things and make a go of it.

53:45Scott Galloway:These actually can be really good stocks. Cable news is still a good. I think what they also might be waiting for, and I'd be curious to get Rich's view on this. Typically, these companies lose money. It's like the dirty secret, especially retail, is they lose money for 48 weeks. And then for four weeks from Thanksgiving to Christmas, they just print money. I think in some of these cable news, I don't know if Disney owns local stations or not, but they make a shit ton of money around the election. And that guy, that guy who hosts ABC News and also the fact that CBS News went from 5 million viewers a night to 4 million probably hasn't held the value of ABC.

54:22Scott Galloway:So my guess is my guess is they keep thinking, all right, someone's offered us. The problem is the only buyers right now are smart. That's good. You should be one of those smart buyers. Yeah, but the problem with smart buyers is they want to pay market value. What he's looking for is some drunk kid with a rich father to come in and overpay for the thing. He's hoping for a Skydance, Paramount, Warner Brothers-like valuation, and no one's going to give him that because all the people who will buy these linear assets actually have calculators, and they want – and to be fair, these things, it's very dangerous right now.

54:58Scott Galloway:Now, CNN, I think CNN's viewership is off 30 or 40 % year on year. So they keep waiting for a better price. And every day, the price probably gets worse. So yeah, at some point, I think you're right. I think there's probably is an opportunity for a PE player to come in and say, Here's a shitty, shitty offer. You must take it. Well, I'm sure they've already had those. or for Versant to come in and take this out. But any price at this point is accretive to the core business in terms of shareholder value. I'm excited to see what happens for the next 12 to 24 months. I think it's a buy here. I like this.

55:43Scott Galloway:I can never find value anywhere. I like your idea around these software stocks that may have been overpunished, and I do think Disney is an opportunity. Disney's going to have, usually you don't get an activist with a new CEO because they'd like to give the guy the benefit of the doubt as a honeymoon phase. But I wouldn't be surprised if someone, a pelt-like figure, somebody is taking, is starting to acquire or aggregate shares here. If this thing keeps going down, somebody's going to show up.

56:09Ed Elson:Josh DiMaro just needs to prey on either a drunk child of a billionaire showing up or a Saudi crown prince of some kind. Saudi can't own it.

56:19Scott Galloway:Gulf can't own ABC News. Fair enough. We'll see, but fair enough. I think they should have that anchor. I forget that guy. He looks ethnically ambiguous. I think they should have him do the evening news with his shirt off. If they want to juice ratings, that guy's dreamy. I'd like to see him take up hockey and fuck a bunch of dudes in a locker room.

56:36Ed Elson:Is that wrong, Ed? Not wrong. I think that might be your fifth heated rivalry mention in the last couple of weeks. I'm starting to think that you are binge watching this and watching it again.

56:48Scott Galloway:You watch four episodes of that thing in a row, you rethink everything, Ed. You rethink everything.

56:53Ed Elson:I can't wait. Okay, let's move on to our final story here.

56:57Scott Galloway:That was a good segue. Let's get them off the gay hockey. Let's get them off. Back to price earnings. Antitrust hearing. Anything quick.

57:08Ed Elson:Cut to commercial. We'll be right back. And for even more markets content, sign up for our newsletter at ProfitGMarkets.com slash subscribe.

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1:00:22Ed Elson:We're back with Prof G Markets. Anthropic used the Super Bowl to take a shot at OpenAI, and it worked. The company dropped its ad early, building buzz before the game and reminding everyone that the Super Bowl is still one of the biggest marketing stages there is.

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1:01:28Ed Elson:awesome music um for our audio listeners the tagline at the end reads ads are coming to ai but not to claude as a reminder open eye recently announced that it would begin testing ads on chad cpt that news caused a stir online as sam altman once described ads as quote a last resort for us as a business model. So Scott, big win for Anthropic. This ad went mega, mega viral. Everyone is dunking on OpenAI. Everyone's making fun of OpenAI with these ads. Sam Altman had a pretty hilarious and pathetic tweet that he put out, which we can get into. Let's start with your initial reactions.

1:02:06Scott Galloway:It used to be that the right commercial could change a business's trajectory. When Hyundai came out with this commercial saying seven-year warranty, you know, Coca-Cola's, occasionally there's an ad that is so breakthrough and grabs people's emotions, it just juices sales and rejuvenates the company. That almost never happens anymore because people aren't watching. The audience has become so fragmented and people immediately go on their social graph or online and due diligence on whether this product actually is worth it or not. This is the biggest moment in broadcast advertising as it relates to impact on the markets we've seen in a long time.

1:02:43Scott Galloway:This is the moment that Anthropic begins an ascent in valuation past open AI. And in my course on brand strategy, we have a bunch of different models and constructs for evaluating brand and strategy. And one of them I call laddering. And that is you say, we're this, they're this, and you find points of differentiation that pass three hurdles. Differentiation, are we truly different? Relevance, does anyone care? And three, is it sustainable? So we're Democrats. We're for bodily autonomy, therefore denying a woman's rights. Is it differentiated? Yeah, we are truly different on this. Is it relevant?

1:03:19Scott Galloway:No, we'd like to think it is, but family planning and abortion rights never show up at the ballot box as much as we'd like to think it's going to happen this time. And is it sustainable? Can we own it? Anthropic has done laddering here. They've said, okay, we're not going to have ads. That is a point of differentiation because the number one use case for AI at corporations is what, Ed? Very good, Ed. Okay. We'll all go by service now. But anyway, so it's therapy. People are revealing the most intimate questions and concerns to AI. And the thought that this person is going to take all your personal information and start saying, oh, you seem to be suffering from depression.

1:04:03Scott Galloway:Have you thought about Lexapro from Hoffman LaRoche? I mean, you know what you're getting with Google. You know that they're going to take you to a place they can further monetize and mix in some utile information. We have been opening up so much about our most personal information to AI that the thought that they're going to put in ads, it really is different. Anthropic has said, no, we're not going to do that. It's hugely relevant to people because people are already scared and worried about AI and the thought that they're going to start taking all of our history and all of our most intimate secrets to prostitute us to advertisers.

1:04:37Scott Galloway:And it's also most likely sustainable. I think it'll be difficult for Sam Altman to go back on it because he has all these growth projections he has to live up to, including going back on his word and saying he wasn't going to do porn. Now he's saying he's going to do porn. And the execution here around these ads, oh my God, this is Whedon Kennedy-like Nike ad material. These, whoever did these ads, this ad is going to get, if the Super Bowl is like the Super Bowl usually is, it's a shitty game, this ad is going to get more attention than the game itself. This is a pivotal moment that still shows that advertising can be relevant.

1:05:16Scott Galloway:Whoever's the agency here, their phone is ringing off the hook. they're getting, they're getting, there's always kind of a hot agency for a while that they do it, a great ad campaign. And people are under the illusion that these guys, if we bring in these people and they wear black and they party with us and they're really attractive. So we'll spend, we'll waste a lot of money on them that they can rejuvenate our business. This is a big moment for, for, um, Anthropic and this execution, they've already gotten 10 times the ROI on the Superbowl commercial before it's even run. This is, I'm blown away, Ed.

1:05:52Scott Galloway:I'm totally blown away. 100%.

1:05:53Ed Elson:Sam's response was hilarious. He put out an essay on Twitter. This is Sam Altman, the CEO of OpenAI. He said, quote, first, the good part of the Anthropic ads, they are funny and I laughed. But I wonder why Anthropic would go for something so clearly dishonest. He goes on to say, I guess it's on brand for Anthropic doublespeak to use a deceptive ad to critique theoretical deceptive ads that aren't real. But a Super Bowl ad is not where I would expect it. We are committed to broad democratic decision making in addition to access. One authoritarian company won't get us there on their own to say nothing of the other obvious risk.

1:06:30Ed Elson:It is a dog, blah, blah, blah, blah, blah. No one fucking cares. He got roasted. And he's trying to make this argument that, you know, it's not true how they're portraying the ads in ChatGPT. we're not going to be surreptitiously putting the ads in there and trying to recommend them while you're doing your therapy, which may be true. Maybe the ads will be a lot better than that. Maybe it'll be a lot less dystopian than Anthropic has suggested with this ad. Point is, no one fucking cares. It was a good ad. It was funny. The way that they even nailed down the voice of ChatGPT, which is this like awkward, monotonous, sycophantic, very annoying voice that everyone has gotten sick of like it's just a good ad and they they clearly are demonstrating they have their finger on the pulse here and that's all that matters and so for satan development to come out and give this essay on on critiquing the the details of this of this ad it's like this is some of the worst pr uh comms that we've ever seen and i mean it just rubs salt into the wounds that Anthropic, everyone's turning on OpenAI.

1:07:40Ed Elson:Anthropic is emerging as the winner. You said that this was like the coming of age moment for Anthropic, I totally agree. For me, it has parallels to the Apple ad, the 1984 Apple ad, which was regarded by many as like the greatest commercial of all time, also aired during the Super Bowl and also took a direct shot at a competitor, which at that time was IBM. And the whole idea was saying through, you know, undertones, the sort of subtext of the ad, was that IBM is big brother. They're going to have this mind control. They're trying to take over the world. Apple's going to be the company that liberates you with personal computers.

1:08:28Scott Galloway:On January 24th, Apple Computer will introduce Macintosh. and you'll see why 1984 won't be like 1984.

1:08:38Ed Elson:It's just a good ad. It's like a good message. It's something that resonates. That's exactly what Anthropic has done. And, you know, I said a few months ago, I think you agreed, Anthropic's going to be the heavyweight champion of AI in 2026. The narrative on AI is beginning to waver. And a trillion dollar AI spending plan, it just isn't quite what it used to be. It doesn't sound as sexy as it did, say, 12 months ago. And that may well mean pain for OpenAI, which has, of course, been leading this charge. But more importantly, it might mean new opportunities, opportunities for other companies that are taking a different approach.

1:09:25Ed Elson:It might mean the beginning of the rise of a new heavyweight champion, a new AI winner. It does look like that winner could well be anthropic. And I feel like this is kind of the moment where everyone realized, yeah, this is actually happening.

1:09:42Scott Galloway:I don't think Altman was well advised here. I think he should have said, when you're the market leader and there's still a market leader, you don't reference the competition. Yes.

1:09:51Ed Elson:Don't say anything.

1:09:51Scott Galloway:You never talk about them. And if he'd been asked about it, he should have said, I've seen it. It's a great ad. That's it. That's it. Because anything beyond that looks defensive. Totally agree. And he might put out a separate release talking about, okay, I want to clarify some things around our ads, what they will be used for, what they won't be used for, where they can add value, anything around medical information, anything around relationships, we will not be inserting. But when you respond to the number two player, which they still are right now, you're basically saying, I'm scared.

1:10:24Scott Galloway:Hertz never referenced Avis. Coke never referenced Pepsi. you don't ever reference your competition when you're the number one player and he just comes across he comes across as defensive and uh you know he's been caught flat-footed i get it but he should the his only his only thing should have been yeah of course i saw the ad i think they i think they did a great job good for them nothing more and then maybe give it some distance and then put out something about all right let's talk about our advertising what it will be used for what it won't, why we think it's such an incredible opportunity to add value to our customer base, why it'll be a huge revenue opportunity, let's be honest, and what it will not be used for such that you can, you know, if you're talking about, we will not take pharmaceutical ads.

1:11:14Scott Galloway:I'm obsessed whenever I get any of my health information, I upload it to ChatGPT. I want to know there's no pharmaceutical influence here telling me, oh, okay, you you know, whatever it is, we have shoulder pain. I just don't want, I want to know that they're doing their best to give me, I mean, AI should be the clean, well-lit place of the internet to a certain extent around information. It gets it wrong, but their heart should be in the right place. So yeah, this is, this is a seminal, I believe this is a seminal moment. I believe that when we look back on this, this will be seen as a big moment in the AI wars.

1:11:54Scott Galloway:Would you agree this

1:11:55Ed Elson:could be like the 1984 Apple ad moment. I feel like that was Apple's moment in the computer revolution. I mean, this is it, right? It's a great analogy. This is that kind of landmark broadcast advertising moment. It's very exciting. It's also kind of interesting to see the return of advertising, which I feel like people have been sort of counting out that advertising is kind of dead or it's boring and, you know, the Mad Men era is over. But it's kind of fun and exciting to see what a great ad can do for your business. I mean, we'll see what the ROI will actually be, but it's already gotten millions of views.

1:12:29Ed Elson:And this is before it was actually aired on the Super Bowl. This was just the pre-release. They just posted it on social media, got millions of views across the internet in literally under 24 hours. And I find it exciting and cool. And I'm sure if you're working at an ad agency, it's also fun and exciting and cool to see just such a good, clearly created by humans as well. Like, this was clearly someone who's used ChatGPT a lot, who understands the nuances and annoyances of the product. Like, this is a very human commercial. And they've come out there and they've put it out there. It's resonated so much with so many people.

1:13:06Ed Elson:It does feel like this is kind of like the resurgence of the golden age of advertising. And I just love that it's going to be on the Super Bowl, which, of course, is, you know, the grand stage for advertisers around the world.

1:13:18Scott Galloway:By the way, the creative partner, it was produced by Anthropic, but the creative agency is a group called Mother, which is independently owned. It's not owned by one of the conglomerates. My guess is the next year they'll sell because everyone will want to talk to them and they'll realize it's the right time to cash out. By the way, let's bring this back to me, Ed. Please. And when I was right out of business school, I met this guy named Warren Hellman. And I'd started Profit, my brand strategy firm. And he said, I've got a great assignment for you. And he goes, I'm going to pay you to go to Levi Strauss and Company board meetings.

1:13:51Scott Galloway:I don't want you to speak to anybody. I don't want you to be politicized. And at the end of the board meeting, I want you to stand up and give us your honest, thoughtful advice. And I was like 29. I mean, that's a dream job, right? And they invited two other people for their unfiltered advice for the next two years of board meetings. They invited a guy named Lee Clow, who was head of TBWH at a day, and a guy named Nigel Bogle from the hot agency of that time, BBH. And we listened to the whole board meeting, and then we each get 20 minutes to just stand up and give our piece. And so it was a strategy guy, yours truly, and two creative guys, agencies.

1:14:27Scott Galloway:I haven't seen an ad man in a board meeting in 20 years. No one gives a fuck what agency people think anymore. And if you go to, I've been going to Cannes for a long time. Every year, the amount of beach space, the fabulousness of the parties gets smaller and smaller for WPP, IPG, Omnicom, Havas, and it gets bigger for the tech guys. I mean, the lack of intellectual currency and influence of the ad market is just it's just shriveled up and gone away. It's striking how how little people care about their viewpoints. Ad agencies used to be in every strategy strategy meeting. They used to be seen as a key thought partner.

1:15:09Scott Galloway:Now, literally, no one gives a shit what they think.

1:15:11Ed Elson:But maybe this is going to change things.

1:15:13Scott Galloway:Probably not. But maybe this is a blip. But this will, mother's going to get a ton of business, unearned business, because everyone will be like, we hired the same agency that did the Anthropic ads, and then they're going to sell to one of the big conglomerates and go open a bar in the Bahamas or something. That's what I would do. That's what I would do. Start a hockey team.

1:15:32Ed Elson:I love that. Okay, let's take a look at the week ahead. We'll see the employment report and consumer price index for January. We'll also see earnings from Apollo, Lowe's, Coca-Cola, BP, Spotify, CVS, Robinhood, Ford, McDonald's, Shopify, and Airbnb. The earnings continue to roll in. Scott, do you have any predictions?

1:15:52Scott Galloway:We've already made it. In 12 months, Anthropik's going to be worth more than OpenAI. This is a big moment. Anthropik has gone after the enterprise market, smart move. OpenAI has kind of dominated consumer. Sort of the analogy I would use is 25 years ago, Dell versus Gateway. And Gateway went consumer and Dell went small, medium-sized business. We know how that turned out. Anthropic has gone enterprise. OpenAI has built a consumer business. And I think there's been a series of missteps at OpenAI. I think Anthropic is going this way up. And OpenAI is going down. and within 12 months, I think Anthropic's raising at$350.

1:16:35Scott Galloway:OpenAI claims are raising at$850. Within a year, and I don't know what the relative numbers will be, but in a year, Anthropic is going to be worth more than OpenAI.

1:16:48Ed Elson:This episode was produced by Claire Miller and Alison Weiss. Mia Silverio is our research lead. Our research associates are Isabella Kinsel, Dan Chalon, and Chris Nodonoghue. Benjamin Spencer is our engineer. Drew Burrows is our technical director. and Catherine Dillon is our executive producer. Thank you for listening to Prof G Markets from Prof G Media. Tune in tomorrow for a fresh take on markets.

1:17:14Lifetimes

1:17:19You have me In kind reunion

1:17:30As the world turns And the dark flies In love

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