The Future of Hollywood — ft. Ted Sarandos

23:00Well, they're doing it at the same time. And so, and I do think that there's one of those things where you say, well, people don't have the attention span for TV anymore. Well, wait until the new season of Wednesday comes out. And people sit in front of their TV and watch eight hours of Wednesday. Happens every season. So, the good news is in 2008, I bought Netflix stock for$12 a share. Here we go. Yeah, but wait. Now you listen to everything he says. So I think on a split-adjustice basis, it's now at$700. The bad news is I sold it three months later at$10 a share for a tax loss. I literally want to find a time machine so I can go back, track my ass down, kill me, and then kill myself.

23:41Anyways, just think to that. Your stock is up, I think, 850 % in the last 20 years. The last five years, it's kept pace with the S &P, but it hasn't outperformed. and the last year has been not a tough year, but you're a CEO of a public company and it's very much what have you done for me lately. And I think the general sense is, and you tell me if this is not correct, is the clip economy that Ed is talking about is just eating. I mean, the fear is that people our age is we don't know what we don't know. And what I see with my kids, and I think unfortunately right now the most powerful force in media, I would argue, is probably Instagram Reels.

24:18And that is our brain, we have a generation of people being wired to consume content in 60 and 90 second big format you now have including debt the acquisition you passed up you technically after i i heard you were passing i texted him like you got 112 billion dollars to go plan traffic now it feels like you do need to inspire some more growth you're you're still growing but i doubt you think of yourself as a mature company and your growth is still solid, but not the growth that once was. With that$112 billion, where are you going to find growth? Is it continuing to do what you do or do you have other ideas about new businesses you're currently not in?

25:02Well, look, we're about 9 % of total TV watching right now in the U.S. in our most mature market. We're about 45 % penetrated in our addressable markets. And growing that penetration and growing share in what we're doing is a big business. You know, this first quarter of this year, we grew our revenue by 18%. We grew our 16%. We grew our gross margin by 18%. We've got a guide out for this year to be 12 % to 14 % of growth and 31.5 % margin. We also have a doubling of our ad business to$3 billion this year. So we've got a lot of growth on the horizon of what we're doing because we've just barely scratched the surface of what we're doing.

25:43You know, it's remarkable to me in some of these TV markets around the world that we're, you know, we're still in our infancy in a way. So we go out and see. And if I worried a little bit about what you're saying, I obviously follow consumer trends. We see what young people are doing. And then having tried to distinguish what will they do when they have more money and less time, which is generally how these things evolve. And being part of their media landscape is really important. And they may use the phone to get excited about something. You saw that we just redid our TV UI, but we also redid our mobile UI and added vertical video.

26:20not to compete with TikTok, but to be more discoverable in a format that's more native to younger people when they use their phone to find things. And the ease of use of going from this, you know, from the vertical video on the phone to the actual presentation on your TV is really where we're focused. And there's a lot of growth there. But you don't see a need or an opportunity to take your content and slice it up in some sort of new, using new technology and create or play in the short form video space? I mean, we can, but I think, like I said, I don't know. There's a lot, on the phone, there's an enormous amount of competition for your attention on that phone.

26:57And a lot of it is free. It's almost all free. So what I'm looking for is the most valued moments of truth. I'm looking for that entertainment worth paying for. You know, when we first started, back on, before, you know, from DVD into streaming, our big mantra was, our content has to be better than free. Because at that time, piracy was the competition. And we had to be better than piracy. We had to give people a reason not to steal because it was so easy to download back in those days. So that was always been our focus. We have to be, we're a super consumer focused business. We constantly are looking at how we're entertaining people.

27:33We look at our metrics, our internal metrics, how we grade ourselves on how we're entertaining people on things like, you know, how do they complete? How fast do they go from season one to season two? Do they tell a friend? Do they post about it? Do they give it two thumbs up? So all this internal is always focused not on the quantity of watching as much as the quality of the watching, because it has to be good enough to pay for. On this idea of, I mean, Netflix is sort of the premium product. It's better than free. I think everyone agrees on that. But there was a controversial decision that you made back in 2022 that I think you did not support, which was that you launched ads.

28:14You launched advertising. um it seems to have been an enormous success ad revenues on track to double to three billion dollars more than 250 million ad tier viewers talk about the decision to implement advertising in netflix a lot of people said no this needs to be a premium product we don't want advertising on our platform but at the same time a lot of people use it a lot of people seem to like it well look one of the things I figure out as we go is people have completely different opinions of what they want and how they want it and what's premium to them and how they define it. And the one part of the audience that we were not addressing was the one who wanted a lower price point and didn't care about ads.

28:59And there's a lot of them, it turns out. And particularly, you're talking about young people who grew up mostly watching ad interrupted content constantly. So for them, it was a completely different thing. The reason we were so not in the advertising business at the beginning was it was kind of a classic counter position move. You know, when we first got into DVD, our competition was Blockbuster video stores. What did people hate about video stores? Late fees. So we were the no late fee company. We were total counter positioning. So we get into streaming, we're in the TV business. What do people don't like about TV back then?

29:31What were they complaining about? Advertising and having to wait till next week for an episode. So no advertising, everything at once. Great counterposition. And over time, how does that evolve? And we always fancied ourselves as a choice company. We wanted to give people unlimited choices. Well, one choice was I would like a lower price and I don't mind advertising. And we were not offering that. So that's why we got into it. What do you think people are complaining about now that you need to solve? Over time, I think if it goes down the path you guys have been talking about, I think people will be complaining about AI slop in a few, you know, pretty soon.

30:03Because I think they'll look at things and if you see it already, People pick apart a movie poster on Reddit with every little glitch in the system because it is AI slop. I think a bunch of people will turn on the AI slop and they'll really even more value quality production. Netflix recently launched video podcasts, which is exciting for us. Who would do a video podcast? Lame. You've struck deals with iHeartMedia. Barstool and many other podcasts. And I just saw today that you just signed a deal with Jay Shetty, who's going to be bringing his podcast over to Netflix. Talk a little bit about getting into podcasting.

30:48Why is that the move now? Look, I think it's a great evolution of the format. So we tried talk shows over and over again. And I think the format itself has kind of given way to podcasting. I think the internet has kind of stratified things, everything. Movies are either gigantic or tiny, you know what I mean? And there's kind of nothing in the middle anymore. And I think with podcasts, it's kind of the same thing around people's appetite to hear an interview with someone that they're interested in. They really want to hear this long, free-form interview with their no makeup and guard down, just a real casual conversation.

31:28and they're not really, they don't care how long, you know, they'll spend three hours on these things sometimes, or they want the 30-second clip of it. What they don't want is the overproduced seven-minute couch interview on the talk show that they used to tune into. You know, when I was growing up, 45 million people a night used to tune into Johnny Carson and watch, and so the whole country was into that. Today, as you see, the late-night ratings are not what they used to be. It gets chopped up into clips, and people are mostly watching it on social anyway. So when I look at this and say, Well, what we weren't doing was this new generation of talk shows.

32:00And I think we're seeing we're very small in it today. We're moving very rapidly on it. Jay Shetty was kind of the big deal today because it's moving from YouTube to Netflix and Spotify. And what we're seeing in the very early days that's very promising is that people are watching and they're watching during the day where streaming usually doesn't take place much. and they're watching more mobile than we're used to seeing on other kinds of programming. Well, if you ever want to acquire a podcast with a strained professor and a guy with a weird accent, you know where to find us. You'll have to work on that Hulu joke before you come over.

32:40Yeah, I think your insight on podcasts is just genius. Remember the old podcasts were video podcasts. Now when you ask someone to be on the podcast, they got to get dressed up. They got to go. It's turning into talk show. Everything's turning into TV. Everything's a talk show, yeah. Exactly. I'm glad we don't want to eat hot wings to sit here. It's nice. So you could live anywhere you want. I mean, you could be the co-studio of Netflix from anywhere, given the way your industry is set up and the dynamic and kind of the currency you have in the marketplace. And you choose to live in L.A. And I find, I don't know because of social media, but I find all the shitposting of cities on the West Coast is just so overdone.

33:24I was in San Francisco yesterday.

33:30I was in the hellscape of San Francisco yesterday and just kept thinking, this place is beautiful.

33:40And by the way, it's added the GDP of Europe since World War II in the last 18 months. And then you come into L.A., you fly over the Pacific Coast, you go to In-N-Out Burger, you see this collision of creativity, the Uber drivers are hot. That's an interesting insight there, yeah. Everyone is so hot here. Anyway, you choose to live in L.A. So I'd love to hear just your views on why you could live anywhere. And despite the very real problems that LA faces, you choose to live here. And also just what advice, and I'm sure you've been asked by the governor and other people, what do you think LA could do to ensure it?

34:26I mean, the creative community, I don't want to say has been gutted here, but there's now more spending in production in Vancouver. In Toronto, there is in L.A. So, one, why do you personally choose to live here, continue to live here? And two, what advice would you have for city officials and government and federal officials to try and even recapture some creative juice here? Yeah, look, I've lived here for close to 30 years. California is a great state. Los Angeles is a beautiful city, has a lot to offer. It's a little broken. It's very broken, actually. I'd say that we've been very slow to recover from COVID.

35:04I think we've had this kind of, over the last decade or so, this kind of pull away from production in Los Angeles and a lot of the creative culture that is here because people are here creating. They're here making. California has not been competitive for production. Not competitive with other states. Not competitive with other countries. Los Angeles is a very difficult, very expensive place to work. If you're making a movie or making a TV show. And I'm telling you that firsthand because we have 30 productions in California this year, mostly in LA. I have a$200 million movie here that a big chunk of it is because we're doing it in LA that it costs that much.

35:44and I think that whoever is going to be the next governor, whoever's going to be the next mayor, has got to invest in competing for production in California. Please.

35:59And more than that, in Los Angeles, you've got to streamline the systems. If I get in a car to film a scene and drive from Venice to Beverly Hills to Los Angeles, which without traffic you might be able to do in 25, 30 minutes. I need three different permits with three different schedules, three different fees, three different deadlines of when I have to file for them. It's that times everything you do here. And as an example of a counterexample, we're investing, we're building a big studio in New Jersey. They put up probably the best production incentive in the world, not in the country, in the world.

36:39and that pulled a lot of work back from international production back into the United States, kept jobs in America. Our productions in the last 10 years have created 150 ,000 jobs. So it's$325 billion of economic impact from our original productions, just Netflix. So this is a real industry. And being able to compete with those industries, if I was coming in and doing anything else at that scale, creating that kind of employment, having that kind of economic impact, municipalities would be knocking each other out to get that business. But in California, I think we probably just took it for granted that the crews were here, the talent was here, everything was here, and they let the infrastructure get pretty long in the tooth, and they let Georgia and other places get really good at crew building.

37:27So you're not really taking a sacrifice to make it somewhere else. That appetite, that hunger to stay in the game, I don't know why it dissipated, but it did. and like I said, the next governor is going to have to address it and I think the next mayor has got to not only look at everything that makes it hard, just really sit down. I hear everybody complaining about everything that's wrong about working in this city and I've had very few discussions with the decision makers how to fix it and I'm happy to do it. I ask for it all the time. I offer it up all the time, but I haven't seen much change.

38:02Trying to be, without thinking it through too much, This is not an investor question. You don't have to think about the stock price. Whenever I talk to you, I try and pitch you on starting a TikTok competitor, and you just sort of like humor me, and then we end up talking about your kids. What advice would you have in terms of what you've gotten right and what you've gotten wrong or the learnings at trying to be a good partner, good husband, and a good father? We were brought up to be finding this thing called life-work balance. to figure out what's the exact amount of right balance between how much time you have to dedicate to your wife and to your kids and to your house and to your job.

38:43And the truth of it is, there is no such thing as life-work balance. There are times that you have to be intensely in the game at work. And you have to realize that when you do that, you create tension at home. And then you're going to have to come back and reinvest in that and make sure that people know that you had to go away, but you're still here and you're still here for supporting them and loving them and hearing them. But I'm going to be really tied up for a couple of weeks or I'm going to be really tied up for the next couple of days and understand that you have to make deposits and all of those things all the time.

39:21And don't kill yourself trying to create this thing, which is a myth, I think, which is that there's any such thing as life-work balance. Ultimately, we always end up talking about kids. thoughts on you know you want to be a good dad yeah right yeah like learning's there your kids are watching you all the time and i think they really are even if you think they're not paying attention they are and they're picking up the good and the bad and they're picking up the things that you celebrate they're picking up the things that you value and i'll tell you my wife was very uh It's very helpful for me when my kids were younger of teaching me just to say things like, those are not our values.

40:04Because when kids always want to constantly tell you that, well, so-and-so can do it. They can do it. This isn't fair, whatever. You can just say, yeah, those are not our values. And it was a revelation of a thing to hear. And it's such a simple thought. But kids really need to hear it. And they deeply, deeply want boundaries. And I, like many, went through a period after a divorce and being a single dad where I wasn't always able to provide those or chose not to maybe because it just was hard. And I think that Nicole was really great for me and for my kids in introducing those ideas to us. It's a good place to end.

40:43Yeah. Ted Sarandos is the co-CEO of Netflix. Thank you so much. Thank you, Ted.

40:55we'll be right back

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43:18we're back with prof g markets so if you haven't noticed gas has gotten very expensive sounds like they have noticed in the state of california gas prices have risen to more than six dollars per gallon and here in los angeles it is even higher it's six dollars and 12 cents. Unbelievable. But higher prices aren't just a California story. Across the U.S., inflation is accelerating at a historic rate. National gas prices are rising at their fastest pace since 2022. And the Personal Consumption Expenditures Index, which is the Federal Reserve's preferred measure of inflation, that just came out. It just hit 3.8%, which is the highest number in almost three years.

44:03Consumers are now feeling it. The consumer sentiment index just dropped to an all-time low, worse than the Great Recession, worse than the COVID-19 pandemic, the lowest score we've ever seen. And the big question for investors now is, are consumers reaching a breaking point? That's the question to ask yourself if you're investing in the market. Scott, I'm just going to rattle through some of the inflation data here. So PCE inflation, I said it hit 3.8%, highest since May 2023. CPI, 3.8%. PPI, this is the producer price index. This measures wholesale prices. That just hit 6 % inflation year over year.

44:45Services inflation up 3.3%. Shelter inflation 3.4%. Energy inflation, 17.9%. Gasoline inflation up 28.4 % year over year. I don't know if it's just me, but I think it is fair to say at this point that inflation has officially gotten out of control.

45:07Or maybe I just have Trump derangement syndrome and I'm just reading into it too hard. Maybe I'm just political. What do you think, Scott? Inflation brings down societies or starts revolutions. People think when you're unemployed, you're depressed. But when you're actually what causes a revolution or a change in a society is when you're working two jobs and you're still hungry. And if you think about inflation, it really has been fairly pernicious. If you're not making more, if you're not making 25 % more than you were in 2000, between inflation and a lack of strength in US dollar, you're behind.

45:47What you essentially have is a transfer of wealth from earners to owners. Because if you're making$100 ,000 a year working as a makeup artist in Hollywood, and you aren't making$120 ,000 within five years, your quality of life has gone down. But meanwhile, the person who owns assets, owns a building, owns real estate, in fact, they're just fine. So again, it's another transfer of wealth from the earners to the owners. Now, the problem is, well, okay, great. What do we do about it? It's the boring stuff that moves the needle. And we don't wanna have an adult conversation about what's required to reduce inflation.

46:32We're spending$7 trillion on 5 trillion in receipts in our government. Essentially, inflation is too many dollars facing too few products. And when you're spending 7 trillion on 5 trillion, you're just going to have inflation. It's reeling in government spending, which is going to cause a lot of pain. And quite frankly, it probably means kissing and making up with China and figuring out a way to have probably the biggest tax cut in history would be if, one, we kissed and made up with China. Because you're going to see, I mean, 88 % of our toys under the Christmas tree are from China. And these tariffs are just, it would be difficult to think of a more elegant way to raise prices across the board than tariffs.

47:15That's just literally, I taught macro and microeconomics when I was at graduate school in Berkeley. And we used to use tariffs as an example of how just fucking stupid they were 100 years ago. I mean, we were just, so inflation is literally how you start a revolution. And I think it's already happening. I think we're having a number of small forms of revolution. But it requires an adult conversation around long-term policy planning, which America, and to be blunt, American voters just don't want to have. But this is how societies fail. And at the same time, you're protected from inflation if you're earning more money because you can decide to downgrade your purchases.

48:01And this is the other big problem that we're about to see. if inflation is rising, then you could decide and you're making a lot of money. Okay, maybe I won't eat out tonight. Maybe I won't order the beef tonight. Maybe I'll go for the chicken. Maybe I won't take that vacation. You can really adjust your lifestyle in accordance with inflation. For the lowest earners in society, you're already at the floor of the spending. And you can't downgrade any further. The floor just continues to rise. And that is exactly what we saw in 2022, where for the lowest earners in society, inflation actually rose 8 % faster than it did for the rest of us, than it did for the average of the CPI.

48:39Again, because they couldn't make any lifestyle adjustments. They couldn't do that. Now, on the policy point, you make the good point that there are a lot of complex and important discussions that we could have on how to reduce inflation, how to prevent this. And most of the time, I'm in agreement. We need to get people together. We need to get a think tank together, get all the expert economists and figure out what are we going to do about inflation. On this round of inflation, I have two ideas on what we could do. One, what has been the most inflationary thing that we've seen in our economy today?

49:14It's been one thing. It was tariffs that added one percentage point of inflation. We were at 2%. You added one percentage point. You got us up to 3%. Very easy fix there. Get rid of the tariffs. Done. Policy solution. One of the easiest solutions ever. And then what was the second thing that this president did? The second thing that he did was in February, he decided to launch this war in Iran. He did not plan on how he would execute it. He did not plan on what he would do about the Strait of Hormuz. He wouldn't plan on what he would do about the fact that gas now cannot get out of the Strait of Hormuz.

49:52And now gas prices are up 50%. And what did that do? it added again, one percentage point to inflation. So we were at two, tariffs took us to three, Iran took us to four, the Federal Reserve's target inflation rate is 2%. I have two ideas to get us back down to two, back to where we were supposed to be, get rid of the tariffs, get out of Iran. Those are the solutions.

50:19And it's unbelievable how we have manufactured this problem for ourselves. We talk about the inflation that we saw during COVID, which was really bad, and we should recognize that. I mean, we had 8%, 9%, 9 % inflation at one point. But the reason that happened was because there was a pandemic that showed up, which gunked up supply chains, and then we had to figure out what to do about the fact that we couldn't get together in person, that we couldn't physically interact with each other. That's why you saw those prices rise. That was the problem. And it was something that we couldn't do ourselves.

50:52We couldn't address it ourselves. This one is all our own doing. And as I said to you before, this reminds me of Brexit. This is exactly what happened in Britain. Just decided, you know what, we're going to put up barriers and make life harder for ourselves. Those are the policy solutions for me. Ed, you give me hope. I think you're wonderful. That was perfect. I have nothing to add to that. Well, one thing that we should also think about then is what are investors thinking about this? Because we've talked about on the show, inflation is a problem for the economy, but the economy isn't necessarily the stock market.

51:28And investors so far haven't been so worried about this inflation problem because ultimately stocks go up. So at this point, how are you thinking about inflation as it relates to the equity markets and how it could affect stock prices going forward? America is now a giant bet on AI. And that is effectively 93 % of GDP growth and now 40 % of the market of the S &P is based on the capex of 10 companies that have made a giant bet on AI. And they're not subject to tariffs. They are, I mean, it's obviously an unbelievable technology. They have access to capital, but the reality is the majority of us or the majority of Americans aren't participating in the uplift of the NASDAQ or the S &P.

52:19And going back to the notion of revolution in this country, I think that when you see people traveling 100 miles to protest a data center, data centers have essentially become a vessel or a physical manifestation for income inequality, and people are just incredibly angry. because what they see is, all I hear is that the NASDAQ and the S &P are going up. All I hear about AI companies going public at a trillion dollar market capitalization. And I'm trying to figure out, I'm sitting there and I'm one of the 40 % of US households. You wanna hear what's criminal about the United States right now. The S &P is at an all time high.

53:02Housing prices here, the average house has gone up, I don't know, I think 40 % pre-COVID and 40 % of American households have medical or dental debt. And so you translate that down to a household, that's a single mom whose 15-year-old daughter wakes up in screaming tooth pain and has to go to the emergency room or emergency dental visit and has to borrow the money to get a root canal for her daughter. I mean, think about the shame of that, right? But we don't track medical and dental debt. Quite frankly, who the fuck cares of the NASDAQ Sentinel time high when our team... So we need different metrics.

53:53Once a metric becomes kind of universal, it ceases to be relevant or important. But the general sense is, or my sense is, is that we are really, I mean, effectively, we're returning to where the world usually is and where economies, most economies have been for 99 % of history. And that is a small number of hardworking, talented, fortunate people who sometimes garner a lot of the resources through inheritance, create regulatory capture, invest money. We do it through Citizens United and the government and start allegating and aggregating more and more capital. And they basically run away with the game.

54:38But I do think we're at a breaking point here. I think when six families own more wealth in the bottom 50%, we've decided we're no longer about America. And where I am, and I'm a capitalist, I believe in private property, but the greatest economic growth, The greatest positive sentiment in America was in the 60s, 70s, and 80s when incremental tax rate above a certain amount were 60s, 70s, and 80%. And where I am is that I think we absolutely need to move to a point, and I'll wrap up around happiness. I think a lot about happiness and trying to optimize it. And there is a relationship between money and happiness.

55:19Money can't buy you happiness is a lie. It can. That's the bad news. The good news is, according to Daniel Kahneman, an Israeli-American psychologist and a role model of mine, did a lot of research on the relationship between money and happiness, and it tops out at a certain point. Where you can own a home, health care, take nice vacations, absorb an economic shock. That supposedly in America is around$150 ,000. I think in L.A. it's probably more like$800 ,000 or$900 ,000. But above that, above that, you get no incremental happiness. So then the question becomes, and what I would put forward, is why wouldn't you have, say, pick a big number, over$10 million, over$3 or$10 million in income, why wouldn't you have incremental tax rates of 70 or 80 %?

56:07Because here's the thing. The key to tax code is having taxes that are at least taxing. If you taxed health care, food, and I don't know, health care, food, and say you tax education, those taxes would be really taxing because people would become less healthy and less educated and more depressed. But if you get no reduction in happiness, making$7 million a year instead of$12 million, but that incremental$5 million can provide, say, universal or, say, childcare for 500 homes, their incremental happiness is enormous. So I have become a little bit socialist on this. I think it's time we have an alternative minimum tax.

56:54I'm sounding very, I realize I'm sounding very AOC here, but I've come full circle on this. I do think there's something to the notion of massively increasing an alternative minimum tax above a certain amount of money. We also need to start shaming people who hoard wealth. I just don't think it, I just don't think it, there's just no reason people should be worth what nation states are. It's not going to make you any happier. Anyways, that's my rant. It's probably a problem if you've got inflation rising at 4%, to your point, one in 10 Americans still living in poverty. And at the same time, this is the year, if this SpaceX IPO all goes to plan, we'll see$2 trillion valuation.

57:34I don't really buy it. If it all goes to plan, we are going to be the world's first generation to witness the world's first trillionaire in Elon Musk, who we ran the numbers on this. We looked at how much money he's going to have. Again, if the IPO goes to plan, we'll see. He's going to be worth 3.2 % of US GDP.

57:57The richest American in history before Elon Musk existed was John D. Rockefeller. John D. Rockefeller, at the height of his wealth, was worth, wait for it, 1.5 % of GDP. So Elon Musk is about to be more than double as wealthy as the wealthiest American that has ever existed in John D. Rockefeller. And at the same time, we're experiencing this inflation. And at the same time, we still have huge numbers of Americans who are struggling, who are struggling to put food on the table. And then I think about my generation and why young people are so upset and why young people are going to these data centers and protesting them.

58:35And the fact that half of us don't even believe in capitalism anymore. They prefer socialism instead. And this is essentially what this entire podcast is about, is capitalism. It's about markets. And increasingly, we have decided that we no longer believe in that system. We just want to opt out of the whole system itself. the fact that those two things are true at the same time to me at some point you have to you have to acknowledge the elephant in the room you have to call it quits at some point acknowledge this is a problem we cannot continue on this path so i think that you're probably correct that we're moving in something of of a difficult direction and probably reaching a breaking point

59:19stay with us

59:51We'll be right back. ends June 30th. Terms at aka.ms slash college PC. When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications, and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a$75 sponsored job credit at indeed.com slash podcast. That's indeed.com slash podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsored Jobs.

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1:01:03We're back with Prof G Markets. Our first question is from Shane, who is in seat H320. And Shane has a question about independent media. Where is Shane? Hi. Jesus. the voice of god hi shane hi shane could you stand up yeah yeah so it turns out it's shane smith shane smith of vice media yeah hey shane long time listener first time caller just back from iran right just back from iran uh it's fucked up so as one of this sort of poster children for I saw a podcast that you guys did, it was amazing, about the sort of death of independent slash new media, of which I get kicked in the face a lot for.

1:01:58So I'd like to say it feels like we're heading towards a world where a handful of companies control what gets made, what gets seen, how it gets distributed. And in that world, independent media doesn't have a meaning. So what do you guys think is the future of independent media and is there one? and it's sad that ted's gone because i'd like to hold his feet to the fucking fire yeah he would be the guy to answer that i don't know what scott's thoughts are my i've made my thoughts pretty known and perhaps i should have made it known to ted which is i think the future of media is one word and it's clips that's it i simply look at the amount of time that young people especially are spending on our phones it's coming out to around eight hours a day at this point, if you actually annualize it, if you count up the days over the course of a calendar year, the amount of time that we're spending on our phones, it comes out to 118 days per year, looking at the phone.

1:02:59We spend 122 days asleep, which means that we have 125 days left over to do everything else with our lives, to meet people, to establish relationships, as Scott has talked about, to establish a network. People wonder why are young people underperforming? Why can't they get their app together? It's something that I often say is like, we're operating with 40 % less time than our parents did. We just don't have as much time to live our lives because we are addicted to the phones. To me, that means that the only opportunity in media, you have to go as hard as possible at social media, as hard as possible at the phone.

1:03:37Ted mentioned that he's thinking they're integrated vertical clips that is going to be sort of the way to get the marketing material to get you to watch the show. My view is the vertical clips, that is the main content. That's where people are spending their time. That's where you need to be invested. So that's how we've thought about it with our business. I mean, we do this podcast and it's really fun to be here, but honestly, a lot of me is thinking, what were the best clips from this podcast show? How are we going to get it out on social media, on Instagram, on TikTok? To me, that is the future.

1:04:08And if you're a new independent media brand, you need to be thinking about how do I dominate the algorithm? Because if you don't do it, someone else will. And the people who have been dominating are not the best role models, not the best people we want influencing the minds of young Americans. So that would be my advice. Clips. Yeah, I don't. Look, I don't. Media is obsessed with itself and wants to go back to the good old days. I was called today and asked about CBS. I'm like, who cares about CBS? Like the average age of a CBS viewer is dead. I mean, it's just seriously, the average age of CNN viewer is 64, Fox at 69, CNBC at 64.

1:04:51And I see a lot of incredible alternative independence, Puck, Semaphore, Axios. The guys at Bulwark are doing a great job. I'm very open about our economics. We'll do 20 million this year at very strong EBITDA margins growing 20 to 30 percent a year. I do think there is probably a need for a BBC-like tax where there is an attempt to have just straight-up news that just calls it as it is and attempts to just, and it's hard to do, but attempts to call it, you know, straight down the middle, if you will. But I don't, media tends to have, I wish the Washington Post would just die already. I'm sick of talking about it.

1:05:39And I think a lot of those really talented reporters are going to find really good work at independent media companies. We tend, the media tends to think of itself as so precious and so self-obsessed. There is, I think that there's just a ton of startups, people now, really talented people. I interviewed a woman who just wrote a book called Sex Stinction this morning, Deborah So. She's a genius. And her ability to reach consumers now, and, you know, the ability to start a media company, you basically just need, you know, two turntables and a microphone. Heather Cox Richardson, who's one of my role models on Substack.

1:06:22She's not only a role model because of democracy for me, she's going to make 12 million bucks a year on Substack this year. Right. So, you know, good for her. And she'll hire people. So I don't the death of traditional media. Yeah, it's going away because it's fat. And I go into Rockefeller Center to go on NBC and I see these huge buildings. Podcasts are essentially 80 percent of a television show for 10 % of the price. It's an arbitrage of the means of production where you can offer the vast majority of ABC News Nightly. I'm not as good looking as that guy, but we can be unfiltered and we cost three, 5 % of what it costs to produce that show.

1:07:04But I think media is actually, I don't want to call it in a golden age, but I think there's huge opportunities for independent media. And if you love to write, If you think you have a different view or spin on things, fire up a podcast, fire up a sub stack. I think that you can make a, you know, it's really hard. It always has been hard, but you don't need to be as good looking, which is nice. Anyway, Shane, I'm actually excited. Shane, you've got a great podcast. I've been on your podcast a couple of times. I think it's a great business to be in. And then I think there'll always be, right now, I think there'll be a, there's still, the future's bright for great content and people who are fearless and hold, you know, neither fear nor favor around power.

1:07:57We have another question from Rabbi Steve Leda. Rabbi Leda. In row triple E. and Rabbi Steve has a question about striving for the greater good. I'm really happy to be here tonight. Thank you for coming. And thank you for your leadership and enlightening us. My question is in a society, in a culture, and in a nation like ours, whose DNA is individuality and autonomy and volition and whose politics are petty and coarse, what are the mechanisms if any by which we can strive for and and hopefully achieve greater unity in the common good what are the tools that exist in a culture essentially built upon individuality and autonomy and volition so we're going with the easy stuff first.

1:09:01Do you want to? Look. I know the answer. I'll just let him do it. So, by the way, I'm a big fan of the rabbis. He's been a source of inspiration and calmness for me through COVID and through... So, obviously, a very heated topic, but I'm what Dan Cienar calls in October the 8th Jew. I have no connection to Judaism, no connection to Israel, and I've become 110 % more Jewish in large part because of some of the things you've said. I'm an atheist, but I do think we need more religious institutions and more church and attendance at temple and mosque. I think getting together and serving the agency of something bigger than yourself, especially for young people with shared values and a code is really important.

1:09:56And I say that as someone who, I don't have an invisible friend. I believe in one less God than you. But I just think it's been a real shame to see attendance to religious institutions go down. The policy fix I would love to see across our nation, if there was one policy I could have and have a magic wand, it would be mandatory national service. As screwed up and as many problems as we have in this country, I don't think young people really have any sense that the best thing and the smartest thing they could have done was to be born in America. And I think that even still, and I think the way we create a sense of unity in some of that character you're talking about is giving young people the opportunity to spend time with people from different religions, different political backgrounds, different ethnicities, different incomes, and just see how incredibly wonderful other Americans are.

1:11:02Because I think social media basically says, what's your identity? What are your political beliefs? And then go to that corner. And the enemy isn't Russians pouring over the border in Ukraine or income inequality or climate change. The enemy is your neighbor who doesn't share your political beliefs. So there needs to be a unity, a greater unity around between all of us as Americans. That's where I go.

1:11:32Thank you for the question, Rabbi. I would also add just on that, I think we're starting to see signs that that might actually be happening naturally. If you look at church attendance among young people, among Gen Z, specifically right now, it's actually started to go up. And I was walking through the streets of New York, and I was in the West Village, and I looked and saw a church on the side, and I saw a line of young people going around the block and extending for two blocks just to get into church on Sunday. And I think what we're starting to see, I mean, I felt for a long time that we needed to institute some sort of policies to get us out of our screens, get us off of our phones, get us in rooms together with one another like we are today.

1:12:16And I still kind of believe that we need to sort of push that along, perhaps with some sort of policy. But it might be happening naturally. And we're even seeing this, I mean, we talked the other day about the attendance and these in-person sauna raves and young people getting excited about going out to these run clubs and getting together. I wonder if the pendulum is starting to swing back and if we can get to a place of community and being with one another naturally versus having to force it. Probably what we want is to do both, but I feel optimistic about it. Let's move on to Adelaide on floor two in row D.

1:13:09Where is Adelaide? Hi, Scott. Hi, Ed. My name's Adelaide. I'm 10 years old. Ed, great to see you again. Scott. I just want to interrupt you. Can you come into the light? Everybody wants to see you. Adelaide, I got on a Zoom with a few months ago. Adelaide is 10 years old. She's come all the way out to Los Angeles with her dad. Adelaide, I'm so glad you're here. I just want to give you a round of applause and please continue with your question. Thank you very much, Ed. Scott, you and Ed represent two completely different generations. For someone my age, looking ahead, what is the biggest advantage my generation has over older generations and what is the biggest trap we need to avoid?

1:13:58Woo!

1:14:03can i start with the trap

1:14:08um it's great to see you uh i think the trap and i this theme has recurred throughout this conversation throughout the night the trap for your generation for my generation for both of us it is the screen it's the phone it's technology uh the amount The amount of time that we are spending in person with our friends has plummeted over the past two decades. And people keep wondering, why is that happening? Why aren't people hanging out with each other? It's because we're not spending enough time with our friends, which has been overtaken by the amount of time that we're spending on the phone. And so, there's a reason why one in five Gen Zers today say they have zero close friends whatsoever.

1:14:54The loneliness numbers are really bad throughout America, but it's especially bad for younger people and it's because of the phone. That is the trap. That is the thing that you have to avoid in my view. I hope Scott has talked about this. We've talked about this. I hope that maybe we can create some social policy, some age-gating rules such that we can keep that out of schools, keep young people off of social media as much as possible but it has taken over our lives and your superpower could be to not let it take over yours. So I just want to start with the trap. That would be my recommendation to you.

1:15:30And it's so good to see you. Thank you so much for coming.

1:15:36I got the hard one. I feel like if you're here, it means you're here with your dad. I think that means you have engaged parents. You're clearly an incredibly impressive young woman. I don't know. I feel like you should be mentoring me. There's, and I'll just end here because I don't have a, I think you're, this is going to sound trite, but I think your ability to potentially be in service of others has never been greater. I think that young people can have such an impact on other young people and people they've never met with all of these new mediums and opportunities to communicate and get involved in other people's lives.

1:16:22I wish I'd learned when I was your age how rewarding service is. I didn't figure that out to older and with technology, you can inspire other kids and communicate with them. So I would say it sounds trite, but service. But let me go back. Let me just indicate or out my generation. The way you express, there's something called your love language. And it's acts of service, acts of affection, gift giving. Dudes of my generation and men my age used to do this to me. my love language is money can I give you a bunch of money to take your dad out to dinner while you're here? The answer is yes you should say yes I'm just telling you you should It was$34 Thank you Los Angeles This episode was produced by Proggy Media Thank you for joining us live in LA Make sure you're following us on YouTube, Spotify wherever you get your podcasts We hope to see you again soon Good night everyone

1:17:50Come on.

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